USD/JPY Price Forecast: Remains below 160.00 intervention threshold ahead of Fed

The USD/JPY pair struggles to capitalize on the previous day’s goodish rebound from sub-159.00 levels, touched in reaction to the Bank of Japan’s (BoJ) hawkish pause, and oscillates in a range during the Asian session on Wednesday.

The USD/JPY pair struggles to capitalize on the previous day’s goodish rebound from sub-159.00 levels, touched in reaction to the Bank of Japan’s (BoJ) hawkish pause, and oscillates in a range during the Asian session on Wednesday. Spot prices hold steady above the 159.50 region as traders look to the crucial FOMC decision for some meaningful impetus amid mixed cues.

Heading into the key central bank event risk, the uncertainty over US-Iran peace talks continues to act as a tailwind for the safe-haven US Dollar (USD). Furthermore, economic concerns stemming from continued energy supply disruptions through the Strait of Hormuz undermine the Japanese Yen (JPY) and support the USD/JPY pair. However, intervention fears help limit deeper JPY losses and cap the currency pair.

From a technical perspective, spot prices, barring a few knee-jerk reactions, have been oscillating in a familiar band over the past one-and-a-half months or so. Against the backdrop of a solid rebound from the 200-day Exponential Moving Average (EMA) touched in February, the range-bound price action might still be categorized as a bullish consolidation phase, which backs the case for a further USD/JPY appreciating move.

Meanwhile, the daily Relative Strength Index (RSI) around 56 hints at moderate upside momentum. That said, a slightly negative Moving Average Convergence Divergence (MACD) reading points to some lingering consolidation risk. Mixed momentum oscillators, in turn, make it prudent to wait for a sustained strength and acceptance above the 160.00 psychological mark before traders start placing fresh bullish on the USD/JPY pair.

On the downside, initial support emerges around 159.60 ahead of the 159.00 mark and the 158.50-158.45 horizontal zone, with stronger underlying demand seen at the lower boundary of the trading range below 158.00. A daily close back under the latter would weaken the bullish structure, whereas holding above it keeps the broader uptrend intact and leaves the USD/JPY pair poised to resume gains once the near-term consolidation phase eases.