Important events for today:

13.03 12:30 UTC: USD – Quarterly GDP volume change.

USD/JPY on Friday is holding around 159.40 and remains at the upper boundary of the current range as the dollar receives support from multiple sources. First, investors continue to seek safety amid the conflict around Iran. Second, rising oil prices increase inflation risks in the U.S. and reduce the likelihood of a rapid Fed policy easing. For the pair, higher U.S. bond yields directly strengthen the dollar against the yen.

Another factor is the vulnerability of the Japanese economy to expensive energy. Japan heavily depends on oil and gas imports, so a new price surge worsens conditions for the yen. Meanwhile, the market still expects the Bank of Japan to keep the rate unchanged at the next meeting and only consider a hike to 1.00% by the end of June. This provides the yen with medium-term support, but in the short term it does not yet offset the effect of a strong dollar and energy shock.

A restraining factor for USD/JPY growth is the risk of verbal or practical interventions by Japanese authorities if the movement becomes too sharp. Nevertheless, as of today, the market continues to trade primarily on the theme of a strong dollar and high oil prices. As U.S. rate expectations shift toward later cuts and the Bank of Japan is not in a hurry to tighten policy now, the baseline scenario looks like further USD/JPY upside.

Recommendations: BUY 159.40, SL 159.10, TP 160.30