USD/JPY Price Forecast: Sits near late July high; bulls retain control above 160.00

The USD/JPY pair recently achieved a fresh high since July 31, though it failed to generate follow-through buying and remained below the 160.50 mark during the Asian trading session. Japan's yen continues to underperform due to fiscal concerns arising from soaring bond yields, which heighten the expense of servicing Japan's substantial debt.

Meanwhile, the US dollar soars to a nearly three-week peak, driven by oil-induced inflation concerns and expectations of a Federal Reserve interest rate hike amid heightened US-Iran tensions. The persistent disparity in US-Japan interest rates keeps the JPY carry trade active, supporting the case for a near-term appreciation of the USD/JPY pair.

However, concerns about tighter policies by the Bank of Japan may limit upside potential as traders await the release of the US Nonfarm Payrolls report on Friday. Technical indicators suggest that buyers are still in control, with the Relative Strength Index near mid-60s and the Moving Average Convergence Divergence line holding a slight positive stance.

This implies that the underlying demand remains intact despite the present consolidation. The USD/JPY pair is poised to capitalize on its momentum above the 200-period Simple Moving Average on the 4-hour chart. The 61.8% Fibonacci retracement level from the sharp corrective decline from a four-decade high (160.64) acts as the primary resistance, with a break above potentially paving the way to the 78.6% level at 162.10.

The July swing high near 163.96 remains a secondary resistance, where bullish momentum may start to weaken. A decline below the 50.0% Fibonacci retracement level (159.62) would provide support, followed by additional resistance at the 38.2% retracement (158.59) and the 23.6% level (157.32).