USD/JPY Price Forecast: Bulls cautious below 159.50, 50% Fibo. caps upside on soft USD
- USD/JPY retreats slightly from a two-week high as receding Fed hike bets undermine the USD.
- Expectations of further BoJ tightening support the JPY and contribute to capping spot prices.
- The technical setup warrants caution for bulls, though the US-Japan rate gap offers support.
The USD/JPY pair trades with a mild negative bias below mid-159.00s during the Asian session on Friday, though it remains close to a nearly two-week high touched the previous day.
Signs of cooling US inflation temper expectations for an immediate rate hike by the Federal Reserve (Fed), which keeps the US Dollar (USD) depressed. The Japanese Yen (JPY), on the other hand, draws some support from bets for further policy tightening by the Bank of Japan (BoJ), which contributes to capping the upside for the USD/JPY pair.
That said, borrowing costs in Japan remain significantly lower compared to other major economies, including the USD, which keeps the so-called JPY carry trade active. Furthermore, persistent geopolitical uncertainties should help limit deeper losses for the safe-haven Greenback and support the USD/JPY pair, warranting caution for bears.
From a technical perspective, the recent strong recovery from the 155.25-155.20 area, or the lowest since early May, stalls near the 50% Fibonacci retracement level of the intervention-led slump from a four-decade peak. Meanwhile, momentum indicators hint at waning upside momentum as the USD/JPY pair consolidates under dense resistance.
The Relative Strength Index (RSI) around 56 is mildly positive, while the Moving Average Convergence Divergence (MACD) has slipped slightly below zero with a soft negative histogram. Hence, any subsequent move beyond the 50% retracement level at 159.61 might confront a hurdle near the 100-period Exponential Moving Average (EMA) at 159.85.
A move beyond these levels should pave the way for further gains to the 61.8% retracement at 160.65 and the higher Fibonacci resistances at 162.12 and 164.00. On the downside, initial support is seen at the 38.2% retracement at 158.58, ahead of the 23.6% retracement near 157.30, while a deeper slide would expose the structural floor around 155.23.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | -0.06% | 1.02% | -0.21% | 0.03% | 0.48% | 0.73% | |
| EUR | -0.13% | -0.19% | 0.83% | -0.45% | -0.16% | 0.24% | 0.50% | |
| GBP | 0.06% | 0.19% | 0.99% | -0.25% | 0.05% | 0.45% | 0.69% | |
| JPY | -1.02% | -0.83% | -0.99% | -0.90% | -0.64% | -0.37% | -0.07% | |
| CAD | 0.21% | 0.45% | 0.25% | 0.90% | 0.27% | 0.54% | 0.98% | |
| AUD | -0.03% | 0.16% | -0.05% | 0.64% | -0.27% | 0.40% | 0.66% | |
| NZD | -0.48% | -0.24% | -0.45% | 0.37% | -0.54% | -0.40% | 0.24% | |
| CHF | -0.73% | -0.50% | -0.69% | 0.07% | -0.98% | -0.66% | -0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
