USD/JPY Price Forecast: Can bulls break 160.00 as intervention risks mount?

• USD/JPY faces limits to its advance from Japanese intervention concerns, even as expectations of further Fed rate hikes underpin the US Dollar.
• Having moved above its recent trading range, USD/JPY stays above the 100-day and 200-day SMAs.
• Upward momentum remains strong, with RSI around 64 and MACD in positive territory.

Gains in USD/JPY remain constrained by the prospect of Japanese intervention, leaving the pair little changed around 160.00 on Friday despite strength in the US Dollar (USD). With a 0.91% rise so far this week, the pair is heading for its third consecutive weekly advance. Increasing expectations of additional Federal Reserve (Fed) rate hikes continue to keep the US-Japan yield differential favourable to the Dollar.

On Friday, Japanese Prime Minister Sanae Takaichi pledged that the government would work to maintain an “orderly foreign exchange market,” while noting that Japan continues to stay in close contact with US financial authorities.

Could Japan’s rate convergence limit near-term yen gains?

Expected policy tightening by the Bank of Japan is unlikely to offer much near-term support to the currency, according to analysts at Commerzbank. They write: “While we also expect the Bank of Japan to implement two further rate rises – in December and in spring next year – this no longer favours the Japanese yen. Rather, it signals a convergence between the central banks, which will likely have little impact on the currency.”

With this backdrop in mind, Commerzbank says “we see little potential for the Japanese yen in the near future,” and observes that “in recent days, the yen has already weakened slightly due to rising market expectations regarding the Fed, and is currently trading just below USD-JPY 160.” Its outlook for the coming quarters now allows for only modest gains: “by the middle of next year, we now expect only a slight appreciation towards 155.”

Can USD/JPY sustain its technical breakout?

After a strong recovery from September’s low of 152.89, USD/JPY consolidated within a tight range. The latest advance has lifted it beyond that range, as well as above the 100-day Simple Moving Average (SMA) at 158.97 and the 200-day SMA at 158.74.

Just above the prevailing price, the horizontal level at 160.00 provides immediate resistance and remains the key near-term focus. Meanwhile, the Relative Strength Index (RSI), strengthening around 64, and a positive Moving Average Convergence Divergence (MACD) reading support the upward momentum, remaining consistent with the constructive price structure.

If the pair holds a break above the first resistance at 160.00, attention would shift to 161.00 and 162.00, where earlier selling interest is likely to return. Any pullback could initially attract demand near the current trading area, supported by the 100-day SMA at 158.97 and the 200-day SMA at 158.74. Further below, support lies at the 50-day SMA around 157.44, followed by the horizontal base at 156.00.

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