USD/JPY Price Forecast: Pair Climbs Above 162.20 as Stronger US Dollar Lifts Momentum

Quick overview

During the ealy European trading session on Monday, the USD/JPY currency pair extended its previous session winning streak and remained well bid near 162.24 level, showing 0.53 percent gains in the last 24 hours. However, the bullish bias was mainly backed by the stronger US dollar, which gained traction in the wake of  renewed market expectations of Federal Reserve interest rate hikes later this year. Moreover, the long lasting geopoltical tension between the US and Iran also boosted the US dollar as a safe-haven asset, which further support to the upward flight of this USD/JPY pair.

Oil Price Worries Help USD/JPY Move Higher

Moreover, Japan’s heavy reliance on imported energy turns out to be another key factor that has been pressuring the JPY and contributig to the gains in the USD/JPY pair. As we know, Japan imports most of its oil and energy from other countries. If tensions around the Strait of Hormuz increase, oil supplies could be disrupted, and oil prices may rise. As a result, the Japanese Yen (JPY) comes under pressure and contributed to the gains in the USDJPY pair.

As per the latest report, the issue regarding the Strait of Hormuz has still not been resolved even after a temporary agreement between Iran and the US. Iran wants to maintain its control over this route, and in this regard, Irans ambassador to China stated on Saturday that Tehran will now impose new service fees on all ships passing through the strait. Meanwhile, the United States has clearly rejected this plan, which has increased geopolitical tension in the market.

Strong US Dollar Keeps USD/JPY Moving Higher This Week

On the US front, the US dollar started this week on a bullish track and is still showing gains in the early European trading session. As of now, the US Dollar Index (DXY) is trading at 101.02, showing a 0.16 percent gain. However, the reason for its gains can be linked to the renewed market expectations of Federal Reserve interest rate hikes later this year. Meanwhile, the CME FedWatch tool shows financial markets are pricing in a 77.3 percent chance of Federal Reserve interest rate hikes by the end of the year. This is because inflation remains sticky at 4.2%, the highest in years.

Despite the current gains in the US dollar, traders are still a little cautious because last week’s dismal labor data prompted markets to scale back expectations for a September rate hike. On the data front, the US Nonfarm Payrolls increased by a meager 57,000 last month, severely undershooting the expected 110,000 numbers. This initially put strong negative pressure on the dollar, but on the first day of the new week, the dollar managed to recover its losses. Therefore, the renewed strength of the US dollar is helping the USD/JPY pair to stay bid.

Looking forward, traders are keeping their eyes on the US Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) for June, which is scheduled to be released today at 10:00 a.m. ET. However, the data is expected to show 54.2 reading, compared to the previous month’s reading of 54.5.

Afterward, the release of the Fed June 16-17, 2026, policy meeting minutes will be in the spotlight, which is scheduled to be released on Wednesday, July 8.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

Can Ethereum (ETH) Break Above $1,800 as Vitalik’s Lean Ethereum Plan Revives Institutional Hopes?

5 h ago

Save

Silver Price Forecast: Weak Nonfarm Payrolls Spark Massive Short-Squeezing Surge Back Above $62

5 h ago

Save

Gold Price Forecast: Bears Threaten $4,090 Target as Broken Trendline Solidifies Overhead Supply Ceiling

6 h ago

Save