USD/JPY Price Forecast: Recovers strongly after testing Descending Triangle breakout

The USD/JPY pair is up 0.17% to near 159.70 during the European trading session on Tuesday. The pair trades higher as the US Dollar (USD) outperforms its peers ahead of the two-day Federal Reserve (Fed) policy meeting, which will start later in the day.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 98.75.

Investors expect the Fed to hold interest rates steady in the current range of 3.50%-3.75% for the third meeting in a row and warn of upside inflation and downside economic risks amid elevated oil prices.

Though investors have underpinned the US Dollar against the Japanese Yen (JPY), the latter outperforms its other peers, following the Bank of Japan’s (BoJ) monetary policy announcement earlier in the day. The BoJ decided to leave interest rates unchanged at 0.75%, as expected; however, three board members, Hajime Takata, Naoki Tamura, and Junko Nakagawa, dissented from maintaining the status quo decision ​and called ​for ⁠a hike by 25 basis points (bps) to 1.0%.

In the press conference, BoJ Governor Kazuo Ueda kept the door open for further monetary tightening, but didn’t offer any clear timeframe for another hike.

USD/JPY technical analysis

USD/JPY trades higher at around 159.70 at the press time. The near-term bias remains bullish as it consolidates above the 20-period exponential moving average (EMA) at roughly 159.22. Also, a sharp recovery in the spot after testing the breakout of the Descending Triangle pattern near 159.00 suggests that the overall trend is bullish.

The Relative Strength Index (RSI) near 57 stays in positive territory without signaling overbought conditions, suggesting that upside pressure persists while momentum remains moderate rather than stretched.

On the topside, immediate resistance is seen at the March high of 160.46. Looking down, the initial support is provided by the 20-period EMA at 159.22, with the horizontal support of the above-mentioned chart pattern at around 157.57 acting as a deeper structural floor; a daily close below this latter area would weaken the current bullish tone and open the door to a broader correction.

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