Elliott Wave Update of USDJPY – March 25th, 2026

Key Takeaways

• USDJPY rebounded to week‑start level after initial drop.
• Elliott Wave suggests potential breakout above 160.00 yen.
• Breakout could trigger risk‑on carry‑trade activity.
• Traders eye wave confirmation for sustained bullish momentum.

Summary

The latest Elliott Wave analysis shows USD/JPY recovered from an early‑week decline, returning to its opening level. Traders are now watching whether the pair can break the psychological 160.00 yen barrier. The analysis suggests bullish momentum may resume if wave patterns confirm a higher‑high. A breach above 160 could signal broader risk‑on sentiment in foreign‑exchange markets.

Pulse Analysis

USD/JPY remains a bellwether for global risk appetite, especially as the Federal Reserve tightens policy while the Bank of Japan maintains ultra‑loose conditions. Recent macro data shows a resilient US economy and modest inflation easing, supporting a stronger dollar. Meanwhile, geopolitical developments, such as easing tensions in the Middle East, have softened safe‑haven demand for the yen. Within this backdrop, Elliott Wave practitioners are mapping a potential fifth wave upward, suggesting the pair could test new highs if broader market sentiment stays positive.

From a technical standpoint, the pair has re‑established the week‑opening price after a brief dip, positioning the 160.00 yen level as a key resistance. Wave counts indicate a completed corrective wave, setting the stage for an impulsive move. If price breaches 160, the next support zone lies near 162.50, while a failure to clear the barrier could see a retest of the 158.00 low. Volume patterns and momentum oscillators are aligning with a bullish bias, but traders should monitor for divergence that could signal a false breakout.

The implications extend beyond forex charts. A sustained rise above 160 would likely revive yen‑funded carry trades, prompting investors to shift capital into higher‑yielding assets like US Treasuries and equities. Such a shift could bolster the S&P 500 and other risk‑on markets, while putting pressure on safe‑haven assets. Conversely, a reversal could reignite demand for the yen, tightening funding costs for emerging markets. Market participants should therefore watch wave confirmations closely, as they may provide early signals of a broader risk‑on or risk‑off pivot.