USD/JPY Price Forecast: Bulls await move beyond 156.00 amid constructive technical setup
- USD/JPY attracts some dip-buyers on Wednesday and seems poised to appreciate further.
- Delayed BoJ rate cut bets undermine the JPY and offset a weaker USD, supporting the pair.
- The technical setup also favors bullish traders and backs the case for further appreciation.
The USD/JPY pair finds some support near the 155.35 area on Wednesday and stalls its retracement slide from a two-week high, touched the previous day. Spot prices currently trade around the 155.75 region, nearly unchanged for the day, and look to build on the upward trajectory witnessed over the past week or so.
Despite the US Federal Reserve's (Fed) hawkish outlook, the US Dollar (USD) meets with a fresh supply as investors remain concerned about renewed turbulence over US President Donald Trump’s trade policies. This, along with geopolitical risks, underpins demand for traditional safe-haven assets, including the Japanese Yen (JPY), and prompts some intraday selling around the USD/JPY pair.
Meanwhile, reports suggest that Japan's Prime Minister Sanae Takaichi was apprehensive about more rate hikes in a meeting last week with the Bank of Japan (BoJ) Governor Kazuo Ueda. Moreover, the government nominated two reflationists to join the BoJ board, forcing investors to trim expectations about the speed of interest rate hikes. This caps gains for the JPY and offers some support to the USD/JPY pair.
From a technical perspective, the recent repeated rebounds from the 200-day Exponential Moving Average (EMA) breakout zone and the subsequent move up favor bullish traders. The Moving Average Convergence Divergence (MACD) line has turned higher above its signal and is now back in positive territory, suggesting improving upside momentum after a mid-month loss of traction. The Relative Strength Index around 54 stays above its midline without approaching overbought, aligning with a gradual recovery.
Immediate resistance emerges at 156.90, the recent swing high ahead of 158.40, where the latest advance stalled, and supply reasserted. A daily close above 156.90 would open the way toward 158.40, with a break there exposing the 160.00 region as the next upside objective. On the downside, initial support stands at 155.00, guarding a deeper retracement toward 153.50, where prior lows converge with the short-term consolidation base. A loss of 153.50 would weaken the bullish bias and shift focus to the 152.70 area defined by the 200-day EMA.
(The technical analysis of this story was written with the help of an AI tool.)
USD/JPY daily chart
Bank of Japan FAQs
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%.
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.
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.
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.
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