USD/JPY forecast: Japanese yen outlook after the $35 billion BoJ intervention

The Japanese yen was largely unchanged on Monday morning as investors reacted to last week’s intervention by the Bank of Japan (BoJ). The USD/JPY exchange rate was trading at 158 on Monday, down from last week’s high of 160.

Bank of Japan intervention 

The USD/JPY exchange rate is in the spotlight this week as investors react to last week's intervention, in which the Bank of Japan spent as much as $35 billion in yen buying.

This purchasing happened after the pair rose to the important resistance level at 160 for the first time in months. Yen buying is a situation where the central bank removes the currency from the market, a move meant to boost its demand. The last major intervention happened in 2024 as the currency plunged.

A weaker Japanese yen has a major impact on the economy. On the positive side, it helps to boost exporters like Mitsubishi, Toyota, and Komatsu, especially in the era of higher tariffs from the United States.

However, it hurts importers who now have to pay more money for their products. These importers have been hurt now that the US-Iran war has pushed commodity prices to the highest point in years.

The main risk for interventions is that the impact tends to be short-term. A good example of this is what happened in 2024 when the bank intervened. The USD/JPY pair has been in a strong uptrend since then.

This recent intervention came a few days after the Bank of Japan decided to leave interest rates unchanged, with officials hinting that they will hike later this year.

US non-farm payrolls data ahead 

The next main catalyst for the USD/JPY pair is the new statements by Donald Trump on the ongoing Iran war. In a statement, he said that the two sides were still negotiating, with the US responding to Iranian demands. This explains why the price of crude oil has slumped and why global stocks are rising.

The next important catalyst for the stock pair will be the upcoming US non-farm payrolls data on Friday this week.

These numbers will provide more information about the health of the American economy. Analysts expect the report to show that the economy created 78k jobs in April, much lower than the 153k it created in the previous month.

These numbers will not include the thousands of people laid off when Spirit Airlines filed for bankruptcy after the government funding failed. They will come a week after the Federal Reserve left interest rates unchanged.

USD/JPY technical analysis

USDJPY chart | Source: TradingView 

The daily timeframe chart shows that the USD to JPY exchange rate has pulled back in the past few days. This retreat started after the pair found substantial resistance at 160, where it formed a double-top pattern.

The pair has moved below all moving averages, while the Supertrend indicator has turned from green to red. Also, it is slowly forming a bearish flag pattern, which leads to more downside.

Therefore, the pair will likely continue falling, potentially to the next key support level at 155. A move below that level will point to more downside, potentially to 152, the lowest level in January.