Us Data In Focus
Attention is on the US ISM Services PMI for March, due at 14:00 GMT. It is forecast at 55.0, down from 56.1 in February. Technically, USD/JPY remains above the 20-day EMA near 158.90 within an ascending channel, with the channel floor near 158.10. Resistance is seen at 160.45 and near 161.00, with levels beyond 162.00 if 161.00 breaks, while a daily close below 158.10 would point towards the mid-157.00s. The US Dollar is the world’s most traded currency, making up over 88% of global FX turnover, or about $6.6 trillion per day (2022). The Federal Reserve influences it mainly through interest rates, its 2% inflation target, and tools such as quantitative easing and quantitative tightening. The immediate focus for us is the looming April 7th deadline regarding the Strait of Hormuz. Geopolitical risk is causing a sharp rise in the cost of options, with one-week implied volatility for USD/JPY climbing above 12% for the first time this year. This environment suggests traders should consider strategies that profit from a large price swing in either direction, as the outcome remains highly uncertain.Usd Jpy Volatility And Positioning
Underlying this tension, the US Dollar remains supported by a strong fundamental backdrop. The Federal Reserve held interest rates steady in its March 2026 meeting, citing stubborn core inflation which, according to the latest data, has remained above 3% since late last year in 2025. This policy divergence with the Bank of Japan continues to provide a strong tailwind for the USD/JPY pair. From a technical standpoint, we see the pair coiling tightly below the 160.45 resistance level, a zone that reminds us of the highs from late 2024 which drew verbal warnings from Tokyo. A breakout above this level, potentially triggered by an escalation in the Middle East, could be a trigger for those holding call options with strikes at 161.00 or higher. Conversely, a de-escalation could see the pair test the channel support near 158.10, making put options below that level a relevant hedge. While the upcoming US ISM Services PMI is on the calendar, its impact will likely be muted by the geopolitical headlines. Even so, after a stronger-than-expected March jobs report which showed the addition of 210,000 jobs, a significant miss in the PMI data would be needed to alter the dollar’s underlying strength. A slight dip on a weak PMI reading might simply offer a better entry point to position for continued dollar dominance. Create your live VT Markets account and start trading now.
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