USD/JPY Price Forecast: Tests nine-day EMA support after falling below 157.50

The USD/JPY currency pair has tested the nine-day Exponential Moving Average (EMA) support after falling below 157.50. This occurred as the pair lost ground following minor gains the previous day and traded near 157.30 during the Asian hours on Tuesday. The USD/JPY is currently in a symmetrical triangle, indicating a consolidation phase where neither buyers nor sellers are dominant.

The pair remains slightly bearish in the short term, with its price below both the 50-day and nine-day EMAs. The 14-day Relative Strength Index (RSI) is near neutral, suggesting balanced momentum. The Fed Sentiment Index at 146.89 provides a supportive background but does not outweigh the technical cap imposed by the 50-day EMA.

The pair could target the 50-day EMA level of 158.02, with further resistance around 158.90. A break above the triangle could lead to a bullish revival, potentially reaching a near 40-year high of 163.99. Conversely, a sustained break below the triangle may expose the 11-month low of 152.10. Analysts note a notable shift in speculative positioning, as JPY net longs have decreased from 120,000 to around 72,000 positions.

Fed Chair Jerome Powell delivered a slightly more hawkish-than-usual tone, signaling a bias toward tighter policy due to concerns over inflation from factors such as artificial intelligence and the Middle East conflict. The USD/JPY pair is influenced by various factors, including the Bank of Japan's (BoJ) monetary policy, the differential between Japanese and US bond yields, and overall risk sentiment among traders.

The BoJ's decision to gradually unwind ultra-loose monetary policy and cut interest rates has narrowed the yield differential with the US, reducing the appeal of the Japanese Yen as a safe-haven investment.