USD/JPY Price Forecast: Momentum cools as price slips below short-term average

USD/JPY trades in a narrow range on Wednesday, as the Japanese Yen (JPY) struggles to capitalize on a softer US Dollar (USD). At the time of writing, the pair is trading around 158.50 after retreating from the 160.00 handle touched earlier this week.

The Greenback weakens across the board as risk sentiment improves on growing hopes that the US-Iran conflict could end soon, following comments from US President Donald Trump that military operations may conclude within two to three weeks.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is hovering near 99.34, close to a one-week low after touching ten-month highs of 100.64 on Tuesday.

Market focus is now shifting to Trump’s scheduled address to the nation at 01:00 GMT on Thursday, where he is expected to provide “an important update on Iran.”

From a technical perspective, USD/JPY is mildly bearish after failing to sustain gains above the 160.00 psychological level, a zone that has previously triggered intervention by Japanese authorities.

The daily chart shows price hovering just below the 21-day Simple Moving Average (SMA) around 158.80, suggesting a short-term loss of momentum within a broader uptrend.

Momentum has eased from late-March peaks but remains broadly constructive, with the Relative Strength Index (RSI) hovering near the neutral 50 mark. The Moving Average Convergence Divergence (MACD) has slipped marginally below its signal but remains near the zero line, hinting at consolidation rather than a full-fledged reversal.

On the upside, the 21-day SMA acts as immediate resistance, and a close above this level could open the door for a retest of the 160.00 psychological mark.

On the downside, a strong close below the 21-day SMA would strengthen bearish pressure, bringing the 50-day SMA near 156.96 into focus as the next support level.