USD/JPY Price Forecast: Bulls cautious below 159.50, 50% Fibo. caps upside on soft USD
The USD/JPY pair trades with a mild negative bias below mid-159.00s during the Asian session on Friday, though it remains close to a nearly two-week high touched the previous day.
USD/JPY price forecast suggests cautious bulls below 159.50, with a 50% Fibonacci level acting as a cap on upside. Recent softness in the US Dollar (USD) is holding the pair near a two-week high. Signs of cooling inflation in the US are tempering expectations of an immediate rate increase by the Federal Reserve (Fed), keeping the USD depressed.
Meanwhile, the Japanese Yen (JPY) benefits from bets of further policy tightening by the Bank of Japan (BoJ), which limits upside potential for the USD/JPY pair. Despite Japan's lower borrowing costs compared to other economies, the JPY carry trade remains active. Geopolitical uncertainties also help limit deeper losses for the USD, providing support for the USD/JPY pair.
Technically, the USD/JPY pair has recovered strongly from the 155.25-155.20 area, now testing the 50% Fibonacci retracement level. Momentum indicators indicate diminishing upside momentum as the pair consolidates under strong resistance. The Relative Strength Index (RSI) is mildly positive at 56, while the Moving Average Convergence Divergence (MACD) has fallen slightly below zero.
A move beyond the 50% retracement level at 159.61 may face resistance around the 100-period Exponential Moving Average (EMA) at 159.85. A breakthrough here could open the way to gains towards the 61.8% retracement at 160.65 and higher Fibonacci resistances at 162.12 and 164.00. Conversely, initial support lies at the 38.2% retracement at 158.58, followed by the 23.6% retracement near 157.30, with a deeper decline exposing the structural floor near 155.23.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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