USD/JPY Price Forecast: Resistance at 155.20 likely to test bulls

• USD/JPY extends its recovery from lows below 153.00 last week to the 155.00 area.
• The US Dollar appreciates across the board as investors ramp up Fed tightening bets.
• US Dollar bulls are likely to meet important resistance around 155.20.

The Japanese Yen (JPY) is showing a moderately softer tone against the US Dollar (USD) this week, with all eyes on the monetary policy decisions bu¡y the US Federal Reserve (Fed) and the Bank of Japan (BoJ), due later this week. The USD/JPY pair has picked up to levels near 155.00 but remains capped below a previous resistance area, at 155.20, which is likely to pose a significant challenge for US Dollar bulls.

Markets are pricing a 92% chance that the Fed will h¡ike interest rates on Wednesday, according to the CME’s Fed Watch Tool. An impressive employment report in August and the hot inflation figures seen last week have boosted hopes that the central bank will tighten its monetary policy for the first time in three years this week, despite pressures to the contrary from US President Donald Trump.

In Japan, the BoJ is also expected to hike rates by 25 basis points on Friday and hint at a steeper tightening pace ahead. Analysts at DBS Group Research note that pressure from US Treasury Secretary Scott Bessent has "helped recast ‘Takaichinomics’ away from being Abenomics 2.0, from reflation towards deregulation, investment, and shareholder-friendly structural reform,” further underpinning the narrative of a more durable shift toward BoJ normalization.

In this context, DBS experts note that “even former BoJ-tightening sceptics – including Takuji Aida, an economic adviser to Takaichi and a former vocal opponent of BOJ tightening – are now acknowledging the case for higher rates, strengthening expectations for a hawkish hike on September 18.”

Technical Analysis: Price action remains below the H&S's neckline

USD/JPY trades at 154.87, maintaining a bearish near-term bias as it holds below the neckline of a bearish Head & Shoulders (H&S) pattern at 155.20. Momentum indicators on the daily chart have turned higher but remain within bearish territory, with the Relative Strength Index (RSI) at 37.70, while the Moving Average Convergence Divergence (MACD) is below zero, reinforcing the idea that rallies are still likely to face selling pressure.

The market is showing a mild correction from oversold levels that might lead to a confirmation of the H&S pattern with a failure at the mentioned 155.20. If that level is broken. The next targets are the September 4 high, near 156.75, and the 200-day Simple Moving Average (SMA), at 158.40.

A rejection at 155.20 on the contrary, brings the January and February lows, at the 152.20 area, back into focus. The H&S's measured target lies near the October 2025 low in the 146.60 area.

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