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.

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.