USD/JPY Price Forecast: US Dollar recovery, likely to be tested at 155.20

The USD/JPY pair experienced a moderate reversal on Thursday, recovering some losses after reaching seven-month lows below 153.00 earlier in the week. However, the pair struggled to stay above 154.00 on Friday, with key support at the 155.20 level potentially posing a significant hurdle for bulls. The Greenback showed resilience on Thursday as US Producer Price Index figures highlighted rising energy costs and inflationary pressures, prompting speculation of a Federal Reserve rate hike at their next meeting.

Nonetheless, traders are eagerly awaiting the US Consumer Price Index release later on Friday for further confirmation. Concurrently, oil prices surged to four-month highs, surpassing $100 per barrel, adding headwinds to the Japanese economy and exerting pressure on the Yen. With a bearish near-term bias, the USD/JPY pair has declined nearly 4% over the past two weeks, displaying a corrective reaction from oversold levels but failing to break the neckline of a large bearish Head & Shoulders pattern at 155.20.

Momentum indicators on the daily chart remain predominantly bearish, with the Relative Strength Index hovering near oversold territory and the Moving Average Convergence Divergence indicator well below zero. Should the pair manage to breach the 155.20 level, bulls will face resistance at 156.76 and 158.00. Conversely, key support is located at the January 27 low of 152.10, with additional support emerging below at the October 17, 2025 lows near 149.50.