Chart alert: Watch 157.40 on USD/JPY, hawkish BoJ, ECB and BoE ignite yen strength

• Relative policy dynamics driving FX moves: USD/JPY weakness highlights that USD strength is not absolute, hawkish signals from the European Central Bank and Bank of England offset Fed expectations, pushing the US dollar lower.
• Hawkish tilt from BoJ supports yen strength: Despite holding rates, Bank of Japan Governor Ueda’s comments on wages and inflation signal a potential hike path, reinforcing upside pressure on the yen.
• Technical downside risk building: USD/JPY is at risk of further decline below 157.40–157.50 support (20-day MA), exposing 156.55, while failure to reclaim 159.37 resistance keeps the near-term bearish bias intact.

In the world of foreign exchange, we measured performance on a relative basis in terms of price action structures and macro factors.

A hawkish stance or guidance from the US Federal Reserve does not necessarily result in sustained US dollar strength, as the currency’s trajectory is ultimately shaped by relative monetary policy dynamics across other major developed market central banks.

The ex-post 18 March’s FOMC US dollar strength pop due to Fed funds futures market now pricing in no interest rate cuts by the Fed in 2026 was evaporated yesterday, reinforced by hawkish guidance from the European Central Bank (ECB) and the Bank of England (BoE) despite keeping their respective policy rates unchanged at 2% and 3.75%.

Interest swap markets in the Eurozone and the UK have started to price in two 25 basis points (bps) hikes this year, each by the ECB and the BoE, due to their concerns on inflation risks arising from the slowdown driven by stagflation fear driven by the oil supply shock coming out from the Middle East (US-Iran War).

The US Dollar Index shed -1.1% on Thursday, 19 March 2026, erased the prior day’s gain of 0.7% (ex-post FOMC), and the USD/JPY fared slightly worse off with a daily loss of 1.3%.

The Bank of Japan (BoJ) left its policy interest rate unchanged 0.75%, and we have warned in our BoJ monetary preview report published earlier on Wednesday, 18 March, that BoJ Governor Ueda’s press conference that tends to tilt towards dovish vibes more often based on past conferences, is likely not to trigger a bout of strength in the USD/JPY this time round.

Read more: BoJ meeting preview: Balancing act between growth and inflation as USD/JPY approaches 159.45/161.95 key intervention risk zone

BoJ Governor Ueda highlighted in the post-monetary policy decision press conference that the current spring wage talks have been delivering high chances of another year of wage increases.

He also noted that authorities need to keep monitoring the impact of currency movements on consumer prices, as FX moves now may have more impact on prices than before.

These statements are considered hawkish that suggests BoJ is still on the path of one interest rate hike before 2026 ends.

Let’s focus now on the short-term trajectory (1 to 3 days) of the USD/JPY from a technical analysis perspective.

Watch the 159.03/159.37 key short-term pivotal resistance, and a break below 157.50/157.40 (also the 20-day moving average) exposes the next intermediate support at 156.55 (also the 50-day moving average) in the first step.

On the flip side, a clearance above 159.37 invalidates the bearish bias for a squeeze up towards the next intermediate resistances at 160.23 and 160.74 (also the intervention risk zone where BoJ sold USD against JPY in the past).

• The price actions of the USD/JPY have broken down below the minor ascending channel support from the 27 February 2026 low of 155.54.
• The hourly RSI momentum indicator has exited from the oversold region without any bullish divergence condition, which suggests that the current bounce from Thursday, 19 March 2026, low of 157.51 is a minor corrective rebound within a minor downtrend phase.

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