USD/JPY Price Forecast: Flirts with 200-SMA, 23.6% Fibo. confluence support near 155.75

USD/JPY retreats further from a two-week high and is pressured by a combination of factors.
Hawkish comments from BoJ officials and sustained safe-haven flows lend support to the JPY.
The mixed technical setup warrants some caution before placing aggressive directional bets.

Haresh Menghani FXStreet

The USD/JPY pair extends the previous day's modest pullback from the 156.80-156.85 region, or a two-week high, and attracts some follow-through selling during the Asian session on Thursday. Spot prices slide to the 155.75 area during the Asian session and, for now, seem to have snapped a two-day winning streak amid a combination of factors.

The Japanese Yen (JPY) strengthens in reaction to hawkish comments from the Bank of Japan (BoJ) officials, backing the case for further policy tightening. Apart from this, trade-related uncertainties and geopolitical risks ahead of the US-Iran nuclear talks benefit the JPY's safe-haven status. This, along with a modest US Dollar (USD) weakness, turns out to be another factor exerting downward pressure on the USD/JPY pair.

From a technical perspective, the intraday decline stalls near the 155.75 confluence support – comprising the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement level of the 152.34–156.85 advance. The said area should act as a pivotal point for intraday traders, which, if broken decisively, could prompt some technical selling around the USD/JPY pair and pave the way for deeper losses.

Spot prices might then accelerate the fall towards the next relevant support, which is defined by the 38.2% Fibo. retracement level at 155.15, followed by the 50.0% retracement at 154.60 if sellers regain control. Some follow-through selling would further weaken the bullish tone and expose the 61.8% Fibo. retracement level support at 154.06.

The Relative Strength Index (RSI) has eased to around 55, pointing to positive but not overstretched momentum after failing to sustain readings near 70. The Moving Average Convergence Divergence (MACD) line hovers just above the signal line and close to the zero mark, which suggests modest upside pressure but limited directional conviction for now. This warrants some caution before placing aggressive bets around the USD/JPY pair.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY 4-hour chart

Bank of Japan FAQs

What is the Bank of Japan?

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

What has been the Bank of Japan’s policy?

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

How do Bank of Japan’s decisions influence the Japanese Yen?

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

Why did the Bank of Japan decide to start unwinding its ultra-loose policy?

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

Japanese Yen edges up but remains close to the 160.00 intervention threshold

The Japanese Yen edges up against the US Dollar on Friday, but the USD/JPY pair remains above 159.90 at the time of writing, unable to put a significant distance from the 160.00 level, considered the limit of tolerable JPY weakness for Japanese authorities.

Gold returns to the red, awaits US NFP

Gold price is looking to test the weekly lows, while in the red near $4,450 in the early European session on Friday. The precious metal remains vulnerable amid ongoing geopolitical turmoil. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US May employment report later on Friday.

Arthur Hayes' “Holy Trinity” is dead: Exits Zcash after Orchard Pool exploit

Arthur Hayes has entirely dumped his “Holy Trinity” holdings by offloading his Zcash holdings on Friday. The privacy coin is down 13% so far on Friday, extending Thursday’s 26% decline after an Orchard Shielded Pool audit revealed a critical vulnerability that allowed the undetectable minting of fake coins. Hayes continues to hold Worldcoin ahead of the upcoming SpaceX Initial Public Offering, on the chance of a “high-beta proxy” rally.

Nonfarm Payrolls set to show stable labor market in May as markets digest Fed hawkish shift

The United States Bureau of Labor Statistics will release the Nonfarm Payrolls data for May on Friday at 12:30 GMT. Investors expect NFP to rise by 85K following the surprisingly strong 185K and 115K increases recorded in March and April, respectively.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.