USD/JPY Forecast: Pair Stalls Below 159.00 as Hawkish Fed Minutes Clash With Strong Japan GDP and Trade Data

On the bullish side for the dollar, the minutes of the latest Federal Reserve meeting showed that most officials consider monetary tightening appropriate if inflation remains persistently above the 2.0% target, and called for removing language from the final statement that implied a possible return to dovish rhetoric. These views were expressed before the release of April's Consumer Price Index, which hit a three-year peak of 3.8%. Combined with a resilient labor market — unemployment holding at 4.3% and non-farm payrolls adding 115,000 jobs versus the 65,000 forecast — this reinforces hawkish sentiment among Fed officials and increases market confidence that rates will remain on hold at least through year-end, or could even be raised in December.

The yen, meanwhile, is drawing support from Japanese macroeconomic data. Export volumes rose 14.8%, exceeding the 9.3% forecast, while imports grew 9.7% against an expected 8.3%, resulting in a narrowing of the trade surplus from ¥643.0 billion to ¥301.9 billion. Sales dynamics reached their strongest level in five months, driven by semiconductor shipments — up 15.5% to China and 9.5% to the United States. Combined with the first-quarter GDP data released the previous day, which showed growth of 2.1% year-on-year, these figures confirm the resilience of the Japanese economy — which is holding up against the energy and tariff crisis — and give the Bank of Japan room to continue tightening monetary policy.

Support and Resistance Levels

The pair reversed from the lower boundary of the long-term ascending channel at 156.25 and is approaching 159.37 (Murray level [4/8]). A confirmed close above this level would open the way toward 160.93 (Murray level [6/8], upper Bollinger Band), 162.50 (Murray level [8/8]), and 164.06 (Murray level [+2/8]). Conversely, a break below 156.25 (Murray level [0/8]) could trigger a trend reversal and a move toward 154.68 (Murray level [–2/8]) and 152.10 (the January low).

Technical indicators are sending mixed signals: the Bollinger Bands are turning downward, the MACD histogram is preparing to cross into positive territory and generate a buy signal, while the Stochastic is near the overbought zone — leaving the door open to a near-term reversal.

Resistance levels: 159.37, 160.93, 162.50, 164.06.

Support levels: 156.25, 154.68, 152.10.

USD/JPY Trading Scenarios and Price Forecast

Long positions can be opened above 159.37, targeting 160.93, 162.50, and 164.06, with a stop-loss at 158.25. Time horizon: 5–7 days.

Short positions can be opened below 156.25, targeting 154.68 and 152.10, with a stop-loss at 157.30.