Important Events Today:

27.03 14:00 UTC: USD – University of Michigan Consumer Sentiment Index.

USD/JPY on Friday is trading around 159.50–159.60, near the year’s highs. The pair is supported by dollar demand: high oil prices have raised concerns about global inflation, and the market has lowered expectations for a US rate cut by year-end. For the yen, this is especially sensitive, as expensive energy and capital outflows to the dollar strain the fuel-dependent Japanese economy.

However, the upside potential for the pair is limited. Discussions are growing about possible Japanese government actions to support the yen, and intervention has become a key topic again as the rate nears 160. In addition, the Bank of Japan remains ready to tighten policy further if core inflation stays persistent. Even without immediate action, this raises the risk of sharp USD/JPY pullbacks.

Fundamentally, the balance is less clear. On one hand, the dollar is supported by external tensions and US yields. On the other, a weak yen is already painful for Japan’s economy, and anticipation of government responses limits the pair’s upside. At these levels, a corrective decline in USD/JPY appears more likely.

Recommendations: SELL 159.55, SL 160.15, TP 157.75