USD/JPY Price Forecast: Struggles near 159.00; seems vulnerable below 50% Fibo.

The USD/JPY currency pair faced some selling pressure at the beginning of the new week, but it exhibited limited bearish sentiment and demonstrated resilience below the 159.00 level during the Asian session. This pair is currently near a two-week high, which was achieved last Thursday, suggesting caution for traders amid conflicting fundamental indicators.

The US Dollar (USD) has been weakened due to reduced expectations of Federal Reserve (Fed) rate hikes, which is considered a significant downside risk for the USD/JPY pair. However, Japan's moderate second-quarter GDP growth adds complexity to the Bank of Japan's (BoJ) normalization policy, discouraging traders from making large bullish predictions regarding the Japanese Yen (JPY).

This situation provides support for the currency pair and highlights the need to exercise caution before taking positions for further losses.

On a technical front, the recent rebound from the 155.25-155.20 range, which is the lowest since early May, has stalled near the 50% Fibonacci retracement level of the intervention-driven decline from its four-decade peak. Additionally, the Relative Strength Index (14) is close to a neutral 48, while the Moving Average Convergence Divergence (MACD) has entered negative territory, indicating that upward momentum is waning as the USD/JPY pair consolidates beneath these overlapping resistance levels.

To substantiate the likelihood of more significant losses to the Fibonacci floor at 157.30 and the wider structural low around 155.24, where buyers would exhibit stronger conviction, follow-through selling below the 38.2% Fibo. retracement support at 158.58 is required.

On the upside, the immediate resistance lies at the 50% Fibonacci retracement level at 159.61, followed by the 100-period Exponential Moving Average (EMA) on the 4-hour chart at 159.77. If the USD/JPY pair manages to stay strong above these levels, it could pave the way toward the 61.8% retracement at 160.64, and finally, the recent cycle high near 163.98. Haresh Menghani, an experienced market analyst, provided this technical analysis with the assistance of an AI tool.