After the fourth week of the US-Iran conflict, Markets have felt the pressure, and as we now approach the five-week guideline, pressure to end the conflict is mounting. The US dollar had risen to May 2025 highs, supported by higher petroleum prices, putting the Japanese Yen in an uncomfortable position – Japan is heavily dependent on Strait of Hormuz flows for Oil deliveries, which isn’t helping the already weakened currency.
USD/JPY has found new elevated grounds since mid-February, as dollar strength made a swift return. Early 2026 flows have led to back-and-forth movements in the reserve currency, driven by ceaseless waves of new, contradictory catalysts.
Promptly after the nomination of Kevin Warsh to be the next Chairman of the Federal Reserve, which initially lifted the greenback, the commencement of the US-Iran-Israel conflict in the Middle East fueled a spike in Crude prices.
As most have seen with prices at the pump exploding since early March, one now requires more dollars to fill up their cars, and this added cost has been reflected all across the globe, acting as a self-fulfilling prophecy to lift the denominator for commodities: the US Dollar – or Petrodollar in such fundamental shifts.
US (WTI) Oil and USD/JPY correlation chart, March 23, 2026. Source: TradingView. Past performance is not indicative of future results.
The Japanese Yen, on the other hand, had been subject to its own renewed weakness.
Disagreements between the Bank of Japan’s Governor, Kazuo Ueda, and the Prime Minister, Sanae Takaichi1, over rate hikes triggered a first wave of renewed fragility.
But the can got kicked down further for the Isle of the Rising Sun, a major importer of Crude, as the entire Asian continent finds immense pressure for its energy commodity delivery, with the Strait of Hormuz also de facto closed for the fourth week. In 2025, 84% or commodity flows2 in the Strait went to Asia, and supplies close to 90% of Japanese imports3.
In any case, the damage and fears for the Japanese economy are real, leading to a major drop in the Yen throughout the month.
But this week brought better hopes of an easing US-Iran conflict, which promptly soothed USD/JPY after the major currency pair reached 19-month highs (159.904).
Now breaking its textbook upward channel, USD/JPY has crossed back below its 50-period moving average, shifting momentum back into somewhat bearish territory, particularly after the quasi-double top formation at the FX open.
The Bank of Japan also lowered the bar for a rate hike in the upcoming April 28ᵗʰ meeting4, as growth pressure has eased further, boosting JPY fundamentals further. The major pivot region (157.40 to 157.65) acts as a decisive momentum area.
USD/JPY 4H chart, March 23, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
● 50-period MA 159.08
● 158.50 to 159.50 2026 Major Resistance
● April 2024 160.00 to 160.40 Major Resistance
● June Mini resistance 160.70 to 161.00
Support levels
● December highs Major Pivot 157.40 to 157.65
● 156.605 4H 200-period MA
● 156.00 Pivotal Support
● 155.00 Mini-Support
Footnotes:
1 https://www.reuters.com/world/asia-pacific/japan-pm-takaichi-voiced-concern-bojs-ueda-over-further-rate-hikes-mainichi-says-2026-02-24/
2 https://www.eia.gov/todayinenergy/detail.php?id=65504#:~:text=We%20estimate%20that%2084%25%20of,by%20supply%20disruptions%20at%20Hormuz.
3 https://www.aljazeera.com/news/2026/3/21/iran-says-it-will-allow-japanese-ships-to-transit-the-strait-of-hormuz
4 https://www.reuters.com/world/asia-pacific/bojs-narrative-shift-signals-dogged-commitment-rate-hikes-2026-03-23/
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