USD/JPY Price Forecast: Slips below nine-day EMA, 157.00

USD/JPY extends its losses for the second consecutive day, trading around 156.90 during the European hours on Monday. The currency pair is moving forward within a symmetrical triangle, which indicates a period of market consolidation, where neither buyers nor sellers are in control.

The USD/JPY pair is maintaining a bearish near-term bias as it holds below both the nine- and 50-period Exponential Moving Averages (EMAs). The alignment of short- and medium-term EMAs above price suggests rallies remain capped for now, while the 14-day Relative Strength Index (RSI) near 47 hints at consolidative momentum rather than oversold conditions. The recent easing in the FXS Fed Sentiment Index toward 147.72 reinforces a softer tone for the dollar against the Yen.

The USD/JPY pair could rebound toward the immediate barrier at the nine-day EMA of 157.12, followed by the 50-day EMA of 158.03. Further resistance lies at the upper boundary of the symmetrical triangle around 159.10. A successful break above the triangle would cause a bullish revival and support the pair to explore the region around a nearly 40-year high of 163.99, which was reached on July 23.

On the downside, the USD/JPY pair may navigate the region around the lower boundary of the symmetrical triangle around 155.20. A sustained break below the triangle would expose the 11-month low of 152.10.

Hammack flags inflation mindset risk as Fed keeps policy firmly restrictive

Fed’s Hammack delivers a moderately hawkish message, with a FXS Speechtracker score of 7.2/10, slightly softer relative to the historical average of 7.5/10. The emphasis that “the biggest risk with inflation is the formation of an inflationary mindset,” alongside concerns about demand-driven pressures and capital expenditures keeping price pressures elevated, underscores a strong focus on preventing a de-anchoring of inflation expectations. Hammack’s insistence that policy must remain at a restrictive stance to lower inflation, even as growth and the job market hold up well, signals limited appetite for near-term easing in the United States Dollar policy outlook.

The FXS Fed Sentiment Index slipped by 0.34 points to 147.72, indicating a modest pullback in hawkish intensity following the speech. Despite the decline, the index remains well above the neutral 100 mark, confirming that Fed communication is still firmly in hawkish territory even as the tone cools slightly relative to the recent baseline tracked by the FXS Speechtracker.

BoJ tightening risks resurface as Rabobank highlights chance of historic back-to-back hike

Analysts at Rabobank note that while the BoJ is widely expected to wait until the end of October for its next policy move, market attention has sharpened following comments from former BoJ executive director Momma. He now sees “another 25bps hike --the first back-to-back hike since late-Cold War 1989-90 and the first monthly back-to-back since peak-Cold War March 1980 (when rates hit 9.0%)-- as a ‘real possibility’, albeit at just 20-30%.” Rabobank underscores that even a low-probability scenario of such a move would mark a historically significant shift in Japan’s rate trajectory.

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