USD/JPY bullish momentum builds: Is 160.00 next?

USDJPY surged to an 18-month high, hovering just below the 159.00 level. This sharp depreciation reflects mounting political uncertainty in Japan, fueled by speculation that Prime Minister Sanae Takaichi may dissolve parliament as early as next month to capitalize on her strong public approval and push forward expansionary fiscal measures. The move comes at a critical juncture ahead of today’s US CPI release, adding further intrigue to the currency market.

The upward rally drove the pair to break the short-term sideways channel to the upside, reinforcing the long-term bullish trend, with the next target seen at 160.20. Beyond that, the 38-year high of 161.94, reached in June 2024, could act as a major resistance and potentially pause the upside structure.