USD/JPY Price Forecast: Upside stalls around 159.00 on US-Iran deal hopes

• USD/JPY edges up to near 159.10 as the US Dollar trades higher.
• Iran has stated that the final draft of the peace proposal with the US has been finalized.
• Japan’s National CPI ex. Fresh Food growth cools down at a faster-than-expected pace to 1.4% YoY.

The USD/JPY pair trades slightly higher to near 159.10 during the European trading session on Friday. The pair has been broadly sideways over the last three trading days, with investors awaiting the announcement of a deal between the United States (US) and Iran.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 99.30.

Latest comments from Iran, as reported by the Iranian Labour News Agency (ILNA), have signaled that it has finalized the last draft of the peace proposal with the US. However, Tehran remains adamant about preserving uranium stockpiles and the recognition of Iran’s authority over the Strait of Hormuz.

Meanwhile, investors remain confident that the Federal Reserve (Fed) will not cut interest rates this year, as higher energy prices have accelerated US inflationary pressures. The US Consumer Price Index (CPI) report for April showed last week that the headline inflation increased to 3.8% Year-on-Year (YoY), the highest level seen in almost three years.

In Japan, National Consumer Price Index (CPI) data for April have come in lower than projected. Nation CPI ex. Fresh Food arrived lower at 1.4% YoY vs. 1.7% estimates and the previous reading of 1.8%.

USD/JPY technical analysis

USD/JPY remains stuck in a range between 158.65 and 159.35 for the last three trading days. The near-term outlook of the pair remains positive as it holds above the 20-day Exponential Moving Average (EMA) at 158.44.

The 14-day Relative Strength Index (RSI) prints around 56, pointing to moderate bullish momentum without yet signaling overbought conditions.

On the downside, the 20-day EMA at 158.44 is the first meaningful support to watch; a daily close below it would hint at a deeper corrective phase toward the May 14 low of 157.31. On the upside, the April 30 high at 160.73 remains the key barrier, which could be retested only after a decisive breakout of the above-mentioned three-day trading range.

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