USD/JPY Price Forecast: US Dollar keeps crawling towards the key 160.00 area

• USD/JPY picks up for the second day in a row and reaches session highs above 153.30.
• Market volatility remains low as investors await key macroeconomic events in the second half of the week.
• The technical picture shows moderate bullish pressure, aiming for the 160.00 area.

The Japanese Yen (JPY) remains on the defensive against the US Dollar (USD) on Tuesday, in a low-volatility market, as investors await key data releases and the Jackson Hole symposium, due in the second half of the week, to make decisions. The USD/JPY pair extends gains to levels past 159.30 at the European session opening, drawing closer to the key 160.00 level.

Investors’ fears about another intervention are keeping Yen dips limited, but the mix of concerns about Japan’s fiscal stability and the gap between the interest rates of the Bank of Japan (BoJ) and those of the rest of the major central banks is proving a strong headwind for Yen appreciation.

Volatility, on the other hand, remains relatively low, with markets awaiting the release of US Personal Consumption Expenditures (PCE) Price Index figures, due on Wednesday and, above all, the Federal Reserve Chairman Kevin Warsh’s speech at Jackson Hole on Friday. The market will be eager to know the impact of the US Treasury’s bond repurchasing plans on the bank’s monetary policy and to check Warsh’s resolve to fight above-target inflation.

Technical Analysis: US Dollar holds a mild bullish bias

USD/JPY trades at 159.32, highlighting a series of higher lows and higher highs since bottoming near 155.20 in early August, with bulls aiming for the 160.00 level. Momentum indicators in the 4-hour chart are moderately positive, with the Relative Strength Index (14) around 58, and the Moving Average Convergence Divergence (MACD) histogram showing widening green bars, altogether suggesting that bulls are in control.

Initial resistance is seen in the area between the August 18 high, at 159.75, and the 160.00 level, considered a potential trigger for a Tokyo intervention. Further up, the July 31 high, near 160.90, would come into focus.

On the downside, an unlikely bearish reversal would be tested at the June 19 low of 158.10, ahead of the August 7 low, near 156.70, and the mentioned post-intervention low, at 155.23.

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