USD/JPY Daily Analysis 8/04/2026

USD/JPY touched a one-week high in Asian trading on Tuesday, but lacked follow-through momentum and hovered below the psychological level of 160.00, with mixed fundamental signals. Data released by Japan's Ministry of Internal Affairs and Communications showed that household spending fell 1.8% year-on-year in February, a further deepening of the 1.0% decline in the previous month and marking the third consecutive month of decline. On a monthly basis, personal spending rose 1.5% for the first time in three months, partially recovering from the 2.5% drop in January, but falling short of market expectations. This, in turn, weakened the yen and contributed to the rise in USD/JPY. Meanwhile, the ongoing war in Iran exacerbated concerns about significant pressure on the Japanese economy in the foreseeable future, given its reliance on oil imports from the Middle East. This further dampened market bets on an immediate interest rate hike by the Bank of Japan, becoming another factor weighing on the yen. However, market speculation that authorities might intervene to curb further currency weakness helped limit deeper declines in the yen.

Amid the recent rebound from the key 200-day simple moving average (153.02), a sustained hold above the psychological level of 160.00 would be seen as a new trigger for bullish traders. The 14-day Relative Strength Index (RSI) hovered around 58.55, remaining in bullish territory and not overbought, indicating continued buying pressure but a reduced urgency to extend the rally.

However, the MACD line is flattening above the zero line, only slightly above its signal line, indicating weakening momentum but still positive. Therefore, as a precaution, we should wait for confirmation of further buying before positioning for further gains, targeting the next major resistance level around 160.50, and then challenging the psychological level of 161.00. Initial support is at 158.50, followed by the stronger demand zone around 157.70, the previous breakout area. A daily close below 157.70 would weaken the bullish structure and expose the consolidation zone at 156.20. As long as USD/JPY remains above 158.50, pullbacks are more likely to be consolidation within a continuing uptrend than a top formation.