USD/JPY Price Forecast: Rises to 158.75-158.80 area; 200-EMA on H4 holds the key for bulls

The USD/JPY pair attracts some dip-buyers following the previous day's pullback of around 165 pips from the vicinity of its highest level since July 2024, and climbs to the 158.75-158.80 region during the Asian session on Tuesday.

The Japanese Yen (JPY) weakens in reaction to soft inflation figures, which showed that the National Consumer Price Index (CPI) fell below the Bank of Japan's (BoJ) 2% target and to its lowest level since March 2022. The data further dampens hopes for an immediate interest rate hike by the central bank amid concerns that the war-driven surge in energy prices could weaken Japan's economic growth.

Meanwhile, geopolitical uncertainties stemming from conflicts in the Middle East continue to fuel inflation fears, curbing bets for further interest rate cuts by the US Federal Reserve (Fed). This, in turn, triggers a fresh leg up in US Treasury bond yields, which, along with the risk of a further escalation of the Iran war, benefits the US Dollar's (USD) reserve currency status and supports the USD/JPY pair.

Spot prices once again showed some resilience below the 100-period Exponential Moving Average (EMA) on the 4-hour chart, and the subsequent move up favors bullish traders. That said, the Moving Average Convergence Divergence (MACD) line has slipped marginally below the signal line around the zero mark, with a flat histogram, suggesting fading upside momentum rather than a decisive shift in trend.

Moreover, the Relative Strength Index (RSI) near 48 stays close to its midline, reinforcing a consolidative tone within an overall upward context. Nevertheless, the near-term bias is mildly bullish as the USD/JPY pair holds above the 100-period EMA on the 4-hour chart, near 158.20, which keeps the broader uptrend structure intact.

In the meantime, initial support emerges at 158.20 from the 100-period EMA, followed by 157.65, where the latest downswing stalled. A break below 157.65 would expose deeper retracement levels toward the mid-157.00s. On the topside, immediate resistance stands at 159.30, aligned with recent intraday highs, with a break opening the way to 159.80 and the 160.00 psychological barrier.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY 4-hour chart