USD/JPY Price Forecast: Remains below 159.00 as bulls stay cautious amid softer USD demand

USD/JPY attracts some buyers during the Asian session, though it lacks bullish conviction.
The Fed’s dovish outlook counters Middle East tensions, capping the USD and spot prices.
The mixed technical setup warrants some caution before placing aggressive directional bets.

Haresh Menghani FXStreet

The USD/JPY pair fails just ahead of the 159.00 mark during the Asian session on Thursday, stalling the previous day's modest recovery from sub-158.00 levels or a nearly three-week low. Spot prices, however, stick to modest intraday gains and currently trade near the 158.70-158.75 region, up around 0.10% for the day.

Despite a temporary US-Iran truce, escalation risks remain firmly on the table amid disruptions to shipping traffic through the Strait of Hormuz and accusations of ceasefire violations from multiple parties. This is seen as a key factor behind the US Dollar's (USD) relative outperformance against its Japanese counterpart and acts as a tailwind for the USD/JPY pair, though bulls seem hesitant amid the Federal Reserve's (Fed) dovish outlook.

From a technical perspective, the USD/JPY pair holds above the 158.25-158.20 horizontal support, which now coincides with the 200-period Exponential Moving Average (EMA), retaining a constructive near-term bias. Meanwhile, the Relative Strength Index (RSI) around 42 suggests momentum is stabilizing rather than deeply oversold. This leaves room for further recovery amid persistent uncertainties surrounding the Middle East conflict.

That said, the negative Moving Average Convergence Divergence (MACD) reading hints that any upside attempts could face fading momentum unless price accelerates decisively away from the 158.22 floor. A sustained break below the said support would weaken the current positive structure and expose a deeper correction.

(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 remains under presure above 0.7000; focus on data

AUD/USD has met some renewed selling pressure on Thursday, coming down from tops near 0.7040 to revisit the 0.7000 region ahead of the opening bell in Asia. The pair’s daily decline has come despite a lacklustre performance in the Greenback at the time when investors continued to monitor developments from the Middle East. Looking ahead, the release of flash PMIs will grab the attention in Oz at the end of the week.

USD/JPY declines to a one-week low; eyes trading range support near 157.50 on weaker USD

USD/JPY drops to a one-week low during Thursday’s Asian session, with bears now awaiting a break below multi-week range support near mid-157.00s before placing fresh bets amid a broadly weaker US Dollar. Despite bets for a December Fed rate hike and Middle East jitters, the recent decline in US bond yields keeps USD depressed near a three-week low. Moreover, hawkish BoJ expectations and intervention risks underpin the Japanese Yen, further weighing on the currency pair.

Gold remains offered just above $4,000

Gold prices resume their decline on Thursday, easing toward the area of two-month lows around $4,050 per troy ounce. Higher crude oil prices have reignited speculation of further tightening by the Fed, supporting the US Dollar and weighing on the precious metal.

The estimates keep falling: Why Bitcoin's quantum countdown is accelerating

The threat that Artificial Intelligence (AI) and quantum computing pose to Bitcoin (BTC) and cryptocurrencies in general is no longer a matter of if hardware will catch up; it is a matter of when. Advances in AI-assisted research are adding a new dimension to the quantum computing threat, although neither technology can currently break Bitcoin’s cryptography on its own.

The Bank of England just got its clearest reason to hike. Here's what it's really watching

UK inflation as measured by the CPI accelerated to 3.5% YoY in September, up from 3.1% in August, according to the Office for National Statistics. This is the highest level since October 2025, exceeding economists' expectations of 3.4% and pushing inflation further from the BoE's 2% target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.