USD/JPY Extends Gains Near 159.55 as Strong US Data and Middle East Risks Support the Dollar

The focus of investors and forex traders is on April business activity data from Jibun Bank: the services PMI slowed from 53.4 points to 51.2 points, while the manufacturing PMI accelerated from 51.6 points to 54.9 points, beating forecasts of 51.8 points. Meanwhile, amid the Middle East conflict, Qatar suspended liquefied natural gas (LNG) production following Iranian air strikes, while exports from the United Arab Emirates (UAE) were restricted due to the blockage of the Strait of Hormuz. Against this backdrop, Japan’s imports of natural gas fell by 27.0% year-on-year to 472.0 thousand tonnes, while total purchases in March reached 5.869 million tonnes, up 14.0% year-on-year and 1.0% month-on-month. In particular, the country bought 1.37 million tonnes from Asian countries, 1.22 million tonnes from members of the Association of Southeast Asian Nations (ASEAN), 465.0 thousand tonnes from Russia, 145.0 thousand tonnes from China, and 130.0 thousand tonnes from the United States. At the same time, the government has begun using strategic reserves and plans to release 80.0 million barrels of oil from storage. Prime Minister Sanae Takaichi said the goal is to keep gasoline prices around 170.0 yen, or $1.07, per liter.

At the same time, there is still little sign of a near-term peace agreement between the United States and Iran. The two-week ceasefire ended yesterday, during which the sides were expected to reach a final deal, but major disagreements remain unresolved. On Wednesday, US President Donald Trump, at the request of Pakistani mediators, announced an extension of the ceasefire for an indefinite period, adding that it would remain in force until the leadership of the Islamic republic, which he described as “largely fragmented,” presents a single unified proposal. The White House chief also confirmed that the naval blockade of Iranian ports will not be lifted and that US armed forces will remain on combat alert. Official Tehran, for its part, refused to participate in a new round of talks in Islamabad, accusing Washington of violating the terms of the agreement and adding that dialogue would be possible only after the blockade is fully lifted. Even so, diplomatic channels remain open, and mediators are continuing efforts to narrow the gap between the two sides.

US macroeconomic data are supporting the American currency. In March, the consumer price index rose from 2.4% to 3.3% year-on-year, marking the fastest pace of growth since 2024, while the core reading came in at 2.6% and the producer price index reached a three-year high of 4.0% year-on-year. Retail sales increased by a three-year record 1.7% month-on-month, significantly beating forecasts, driven by a 15.5% rise in gasoline prices. However, even excluding that component, the figure still advanced by 0.6%, reflecting resilient consumer demand supported by tax refunds. The labor market is showing no signs of cooling: initial jobless claims remain steadily low, while the four-week average of new private-sector jobs from Automatic Data Processing (ADP) continues to show positive momentum.

Support and resistance levels

On the daily chart, Bollinger Bands are moving sideways: the price range is narrowing, reflecting the mixed nature of ultra-short-term trading. The MACD indicator is rising and maintains a buy signal, with the histogram positioned above the signal line, while Stochastic remains near its highs, pointing to a risk that the US dollar may be overbought.

Resistance levels: 159.68, 160.00, 160.50, 161.00.

Support levels: 159.00, 158.50, 158.08, 157.50.

Trading scenarios and USD/JPY forecast

Long positions may be opened after a breakout above 159.68, with a target at 160.50. Stop-loss: 159.00. Implementation period: 1–2 days.

Short positions may be opened after a rebound from 159.68 and a breakout below 159.00, with a target at 158.08. Stop-loss: 159.50.