Yen Struggles to Recover Amid Higher Energy Prices. Forecast as of 22.04.2026 | LiteFinance
When GDP stagnates and shows little sign of growth, households tend to increase savings, weighing on investment. Weak investment, in turn, slows economic growth. Sanae Takaichi is seeking to address this issue. Let’s examine the situation and develop a trading plan for the USD/JPY pair.
The article covers the following subjects:
Major Takeaways
- Tokyo is aiming to keep the USD/JPY at 160.
- Japan has fallen victim to a self-fulfilling prophecy.
- The BoJ will not increase interest rates in April.
- Long positions on the USD/JPY pair can be increased if the price exceeds 159.65.
Weekly Fundamental Forecast for Yen
For weeks now, the USD/JPY rally toward 160 has prompted verbal interventions from the Japanese government. When the pair pulls back, the intensity of these interventions eases. Indeed, the authorities are satisfied with the current US dollar exchange rate, which makes investing in Japan more attractive than in other countries. Coupled with a labor shortage — which leads to competition for talent and rising wages — and the lifting of a long-standing taboo on increasing military spending, these factors form the cornerstone of Sanaenomics.
Sanae Takaichi’s approval ratings remain high despite tensions in the Middle East. An FNN poll shows 70% support, while ANN reports 62%. Surveys by Mainichi, Asahi, and Yomiuri place her approval between 53% and 66%. While investors often label her approach as “Abenomics 2.0,” this is not entirely accurate. The policy focus is more clearly centered on stimulating investment.
Japan has been weighed down by a self-fulfilling cycle. Given expectations of little to no economic growth, the private sector has favored savings over investment. This lack of investment, in turn, has contributed to slower GDP growth. Sanae Takaichi is now seeking to correct these imbalances. If successful in revitalizing the economy, public debt levels could decline while tax revenues increase.
Japan’s Exports
Source: Bloomberg.
The crisis in the Middle East has thrown a wrench in the government’s plans. Japan is heavily dependent on energy imports and has been forced to ramp up purchases. In March, a potential trade deficit helped offset the surge in exports to China. However, the question remains: what happens next?
For Sanae Takaichi, it is important that the Bank of Japan avoids premature tightening. Bloomberg reports that the central bank is likely to hold the overnight rate steady in April, as the full impact of the oil shock has not yet been assessed.
Forecasts for Changes in Bank of Japan’s Overnight Rate
Source: Bloomberg.
About 80% of the 51 experts surveyed by Bloomberg believe that the Governing Council will not make any changes in April. In the March survey, 32% of respondents leaned toward tighter monetary policy. Now, 57% predict that the cycle will resume in June.
If neither the Federal Reserve nor the Bank of Japan takes action before summer, the interest rate differential will continue to favor USD/JPY bulls. The same applies to the Strait of Hormuz factor: while Washington can tolerate higher oil prices, Tokyo is far more sensitive to them. As a result, time is working against the yen, leaving the Japanese authorities with little choice but to rely on verbal intervention. The question is how long they can hold off speculators.
Weekly USDJPY Trading Plan
Since early April, the USD/JPY pair has rebounded three times from 158.5, proving the importance of this support level. Long positions established on rebounds from this level can be increased if the pair breaks through the resistance level of 159.6. At the same time, traders should prepare for potential currency interventions.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of USDJPY in real time mode
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