USD/JPY Price Forecast: Bulls await breakout above 50% Fibo. hurdle near 159.65

The USD/JPY pair experiences a positive trend for a fourth consecutive day, following a dip to 159.00 during the Asian session on Thursday. The current prices are near the weekly high, but the upward momentum lacks strong conviction ahead of Tokyo consumer inflation figures and Kevin Warsh's speech from the US Federal Reserve on Friday.

The recent release of slightly warm US inflation data on Wednesday has bolstered expectations of at least one Federal Reserve rate hike in 2026, which is expected to bolster the US Dollar (USD). Meanwhile, the Japanese Yen (JPY) struggles to attract buyers due to the wide US-Japan rate gap and concerns about Japan's deteriorating fiscal situation, further supporting the USD/JPY pair.

The range-bound price action over the past two weeks can be viewed as a bullish consolidation against the backdrop of a strong recovery from the 155.25-155.20 region, the lowest since early May, established earlier this month. The USD/JPY pair remains above the 100-period Simple Moving Average (SMA) on the 4-hour chart, indicating a positive outlook.

The Relative Strength Index (RSI) is close to 57, and the Moving Average Convergence Divergence (MACD) shows slight positive readings, suggesting ongoing upside pressure. A move above 159.63, the 50% Fibonacci retracement level of the recent decline from a four-decade high, would unlock a more decisive advance. Following this, the 61.8% Fibo. level at 160.66 and the 78.6% retracement at 162.13 could be targeted before the recent swing high near 163.99 becomes relevant.

On the downside, the 100-period SMA at 158.90 and the 38.2% Fibo. retracement at 158.60 represent initial support, while a deeper pullback could expose the 23.6% level at 157.33 and the structural low around 155.27.