• USD/JPY gained above 162 level on Wednesday as the yen weakened following fresh U.S. airstrikes on Iran in response to recent attacks on vessels transiting the Strait of Hormuz.
• U.S. unleashed a new wave of strikes against Iran on Tuesday and revoked a licence allowing the country to sell oil after three tankers were attacked in the Strait of Hormuz.
• Market participants remain nervous that Japanese authorities could step into the currency market if the yen weakens too rapidly.
• Meanwhile, Bank of Japan board member Toichiro Asada said he needs clearer evidence of demand-driven inflation before backing interest rate hikes, but noted faster pass-through of rising costs suggests he could support a future rate increase.
• Immediate resistance is located at 162.71 (23.6%fib), any close above will push the pair towards 163.30(Higher BB).
• Support is seen at 161.44(SMA 20) and break below could take the pair towards 161.81(38.2%fib).
Recommendation: Good to buy around 161.30, with stop loss of 161.80 and target price of 160.50
