Nikkei 225 Forecast: Yen Intervention Risk Caps Japan Stock Rebound

Author: Muhammad Umair

Published: June 09, 2026

Key Points

• The Nikkei 225 index has shown a rebound after significant selling, but this appears to be a short-term recovery rather than a definitive bullish breakout.
• Factors such as rising bond yields, Federal Reserve rate hike risks, oil market uncertainties, and fears of yen intervention are likely to keep pressure on Japanese stocks.
• While the long-term outlook remains bullish, the index requires stronger support from the semiconductor sector to regain momentum.

Market Overview

The Nikkei 225 index experienced a rebound on Tuesday following a substantial decline the previous week. This uptick coincided with a decrease in oil prices and a temporary easing of tensions in the Middle East, particularly between Israel and Iran. However, the strength of this rebound is questionable, as it seems more like a recovery from lows rather than a clear signal of bullish sentiment returning to the market.

Current Pressures on the Nikkei 225

Rising bond yields and concerns regarding potential rate hikes from the Federal Reserve are significant pressures on the Nikkei 225. Following strong U.S. jobs data, investors have begun to price in a higher risk of rate hikes, which keeps bond yields elevated and the U.S. dollar strong against the yen, hovering around 160 yen. While a weaker yen could benefit Japanese exporters, it also raises the likelihood of intervention by Japanese authorities, adding to the uncertainty surrounding the index.

Oil Prices and Economic Impact

Japan's heavy reliance on imported energy makes oil prices a critical factor for its economy. Although Brent crude oil prices have decreased, ongoing restrictions in the Strait of Hormuz continue to pose inflation risks, which could further pressure Japanese companies.

Technical Analysis

The daily chart indicates that the Nikkei 225's correction began from resistance near the 67,000 level, with immediate support found at 63,700. The recent rebound from this support suggests a potential recovery. However, a break below 63,700 could lead the index towards a stronger support zone between 60,000 and 62,000. Conversely, a break above 67,000 would be necessary to target the 70,000 level.

Long-Term Outlook

Despite the recent correction, the long-term structure of the Nikkei 225 remains bullish, having gained 11.29% in May. The current correction is viewed as a normal adjustment following such a rally. If the 60,000 level holds, it may lead to renewed buying pressure later in June. However, there is a risk of a deeper correction towards the 50,000 area due to overbought conditions indicated by the RSI on the monthly chart.

Impact of SoftBank's Performance

The significant drop in SoftBank's stock price from 9,000 to around 6,800 is exerting additional pressure on the Nikkei 225. A further decline below 6,800 could push SoftBank towards the 5,000 level, which may also drag the Nikkei down towards the 62,000 area. Nevertheless, the overall bullish structure of SoftBank suggests a potential for a healthy rally in the Nikkei 225.

Conclusion

In summary, while the Nikkei 225 is currently experiencing a short-term correction, its long-term trend remains positive. The index's rebound from the 63,700 support level indicates a potential recovery, but various external pressures, including elevated bond yields and uncertainties in the oil market, may limit upside potential in the near term. Maintaining the 60,000 support level will be crucial for the index to trend higher towards 70,000.