USDJPY Price Outlook: Key Levels to Watch Amid Cautious Optimism

Key levels remain in focus amid cautious market optimism, following Trump’s 15-point proposal plan to end the US-Iran war. Market caution persists after Iran’s denial of any meaningful progress in negotiations, with the DXY holding near the 98 support level and major dollar pairs, including USDJPY, facing short-term drawdown risks. This plan includes major clauses that could help restore stability across the Middle East and its economies, including:

• Dismantling Iran’s nuclear program
• Scaling back support for regional proxy groups posing risks to US assets 
• Implementing a full 30-day ceasefire to facilitate structured negotiations
• Easing key nuclear-related sanctions on Iran in exchange for meeting core US conditions

Markets remain cautious below key resistance levels following Iran’s earlier denial of positive negotiations, which triggered sharp volatility across asset classes. Considering the potential economic fallout from continued disruptions to key supply routes, oil facilities, and overall market sentiment over the coming weeks, markets are balancing between a negotiation-driven recovery scenario and the risk of escalation. This keeps the door open for a potential bullish breakout in the DXY, as discussed in my previous article EURUSD, DXY Price Outlook: Double Top and Bottom Scenarios, or alternatively, further downside in major risk assets in line with renewed dollar strength.

Key Events to Watch

• A positive Iranian response to ceasefire and de-escalation talks, including the reopening of
• the Strait of Hormuz
•  BOJ intervention risks amid the sharp rise of the US dollar against the Japanese yen
• Further escalations and disruptions to energy routes and facilities

Key charts and levels to watch:

• DXY support at 98 and resistance at 100.50
• USDJPY support at 158–157.40 and resistance at 160
• Crude oil support at 80–88 and resistance at 100–110
• Gold support at 4200 and resistance at 4680

USDJPY Price Outlook: Weekly Time Frame – Log Scale

Source: Trading view

From a weekly perspective, the USDJPY chart maintains a bullish bias above the bounds of a consolidation that has been extending since December 2023, within the bounds of an up trending channel from the lows of April 2025 (in blue).

Bullish Scenario:

A close above the 160 mark extends bullish forecasts towards the upper bound of the channel near 160.80, 162, and 164 respectively. A further bullish close above 164 could confirm a breakout from the consolidation, with a measured move equivalent to its height, targeting the 170 level, as outlined in the monthly outlook.

Bearish Scenario:

A close below the 158–157.50 zone, which represents the lower bound of the channel, exposes the pair to further drawdowns towards 152.50 for a potential bullish recovery above the broader 2023–2025 consolidation range, or a deeper pullback towards the 150 and 147 levels.

The upside potential highlighted in the bullish scenario can be further mapped on the 3-month time frame.

USDJPY Price Outlook: 3-Month Time Frame – Log Scale

Source: Trading view

From a 3-month perspective, the bullish bias remains capped below the 1990 highs and the 1.272 Fibonacci extension of the move spanning the 2011 lows, 2015 highs, and 2020 lows, around the 160 level. A close above 164 would mark a break above the 1986 highs, exposing further upside towards the 180 zone, last seen in 1978, aligning with the 1.618 Fibonacci extension level.

As previously highlighted, risks of BOJ currency intervention remain elevated, keeping long-term key levels in focus to confirm the next structural shift in the pair.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves