The yen’s nightmare returns: the Fed and the BoJ have given bulls free rein

After the interest rate decision, the yen continues to lose ground against the USD, with USDJPY quotes testing the 158.30 mark. Find out more in our analysis for 20 March 2026.

USDJPY forecast: key takeaways

• Bank of Japan interest rate decision: previously at 0.75%, currently at 0.75%
• Fed interest rate decision: previously at 3.75%, currently at 3.75%
• USDJPY forecast for 20 March 2026: 160.00

Fundamental analysis

The forecast for 20 March 2026 appears positive for the USD. After a correction, the USDJPY pair is forming an upward wave and may continue to rise, with quotes currently trading near the 158.30 mark.

The USDJPY pair has become hostage to the Bank of Japan’s landmark decision and unprecedented geopolitical pressure. The exchange rate is attempting to recover after a sell-off caused by a shift in the BoJ’s monetary policy paradigm.

At yesterday’s meeting, the BoJ left the interest rate unchanged at 0.75%; this decision can be described as cautious against the global backdrop. Before the BoJ decided to hold interest rates steady, the Federal Reserve also opted not to change its rate, keeping it at 3.75%.

When making the interest rate decision, policymakers took into account that Japan’s economic situation is gradually recovering. The BoJ leadership hinted that it may raise the interest rate in the near future and adjust monetary policy if inflation and economic conditions develop in line with the forecast. It was also noted that the current rate remains significantly below the level required to maintain economic stability.

Only one BoJ board member, Hajime Takada, supported a rate hike. He favours raising the rate to 1.0%, considering the current rate too low given geopolitical risks and the condition of Japan’s economy.

Both rate decisions can be described as neutral, and the BoJ and the Federal Reserve are acting cautiously while waiting for geopolitical conflicts to ease, including stabilisation in the energy sector, which remains highly unstable.

Against this backdrop, the yen has every chance of losing ground against the USD, which could push the USDJPY pair towards the psychological level of 160.00.

Technical outlook

On the H4 chart, the USDJPY rate has formed a Hammer reversal pattern near the lower Bollinger Band and is trading around 158.35. Since the price remains within an ascending channel, it may continue its upward trajectory following the pattern’s signal, with the upside target at the 160.00 mark.

At the same time, the USDJPY forecast also considers an alternative market scenario in which the USDJPY rate may form a corrective wave and test the 157.00 support level before growth.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday)
• Trend: upward
• Key resistance levels: 159.90 and 160.00
• Key support levels: 157.00 and 155.50

USDJPY trading scenarios for today

Main scenario (Buy Stop)

A consolidation above the 160.00 level would confirm continued upward momentum after the correction. Demand remains intact, with bulls returning to the market and pushing quotes higher.

• Take Profit: 161.50
• Stop Loss: 159.75

Alternative scenario (Sell Stop)

A breakout below the 157.00 support level would increase pressure on the USD and indicate another corrective wave.

• Take Profit: 155.50
• Stop Loss: 157.30

Risk factors

The risks to further USDJPY upside are still linked to a possible currency intervention by Japan if the price tests the 160.00 level, as well as to changes in the Bank of Japan’s policy.

Summary

The USD is making another attempt to strengthen against the yen. Keeping interest rates unchanged acted as the trigger for USDJPY growth, with technical analysis confirming the fundamental backdrop and suggesting a rise towards 160.00.

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