USD/JPY Price Forecast: Resistance at 155.20 likely to test bulls

The Japanese Yen has demonstrated a relatively weaker stance against the US Dollar over the course of the week, with market focus centered on monetary policy announcements from the US Federal Reserve and the Bank of Japan. The USD/JPY currency pair reached a level near 155.00 but remains constrained beneath a significant resistance level of 155.20, which is anticipated to present a considerable obstacle for bullish US Dollar sentiment.

According to the CME’s Fed Watch Tool, there is a 92% probability that the Federal Reserve will increase interest rates on Wednesday. In addition, strong employment numbers from August and worrying inflation data from the previous week have fueled hopes that the central bank will commence its monetary policy tightening for the first time in three years, despite opposition from US President Donald Trump.

Similarly, the Bank of Japan is also expected to lift interest rates by 25 basis points on Friday and signal a more aggressive tightening trajectory moving forward. Analysts from DBS Group Research contend that pressure from US Treasury Secretary Scott Besset has shifted 'Takaichinomics' away from Abenomics 2.0, emphasizing deregulation, investment, and shareholder-friendly structural reforms, which further bolsters the narrative of a more enduring transition towards BoJ normalization.

Consequently, DBS experts highlight that "even former BOJ tightening skeptics, such as Takuji Aida, an economic adviser to Takaichi and a former vocal opponent of BoJ tightening, are now recognizing the case for higher rates, increasing expectations for a hawkish rate hike on September 18." The USD/JPY pair trades at 154.87, maintaining a bearish near-term outlook as it maintains below the neckline of a bearish Head & Shoulders pattern at 155.20.

Momentum indicators on the daily chart have shifted to a more positive stance but remain within bearish territory, with the Relative Strength Index at 37.70, while the Moving Average Convergence Divergence remains below zero, reinforcing the notion that rallies are still likely to face selling pressure. The market exhibits a mild correction from oversold levels that may lead to a confirmation of the H&S pattern with a failure at the mentioned 155.20.

If this level is breached, the next objectives are the September 4 high, close to 156.75, and the 200-day Simple Moving Average, which stands at 158.40. Conversely, a rejection at 155.20 would bring back the January and February lows, situated in the 152.20 area, into focus. The H&S pattern's target is near the October 2025 low in the 146.60 area.

(The technical analysis of this story was assisted by an AI tool. For more information, please refer to the source.) The accompanying table presents the percentage change of the US Dollar against various major currencies as of today. The US Dollar emerged as the strongest against the Japanese Yen amidst the heat map displaying percentage changes between major currencies.