US Dollar vs Yen price forecast: ¥157.36 support as USD/JPY trades sideways

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US Dollar vs Yen slips 0.5% today

Highlights

The US dollar reclaimed levels above 160 yen as strong US labor data dampened expectations for imminent Federal Reserve rate cuts.
Japanese institutional investors accelerated record outbound flows into foreign assets, compounding yen weakness despite modest Bank of Japan tightening efforts.
Technical signals remain decisively bearish with USD/JPY likely to consolidate between ¥158.96 and ¥160.56, downside moves favored in the near term.

Record Japanese capital outflows as dollar strength meets policy caution

US Dollar vs Yen recently reclaimed and held levels above the 160-yen threshold, an event regarded as a psychological marker among traders and policy officials. This development was accompanied by U.S. labor market data that exceeded forecasts, which limited expectations for near-term Federal Reserve rate cuts and contributed to persistently high U.S. Treasury yields. Japanese institutional investors recorded record-setting purchases of foreign bonds and assets, accelerating capital outflows and compounding downward pressure on the yen. The Bank of Japan's cautious policy tightening and official warnings about rapid currency moves provided only a partial offset within the broader context of yen weakness.

Bearish momentum builds as oversold signals test key technical supports

On the H1 timeframe, USD/JPY trades below the MA-20 and MA-50 at ¥160.44, while remaining above the MA-200 support at ¥157.36. The Ichimoku Kijun at ¥160.11 marks immediate resistance. Technical momentum signals are bearish: the MACD has triggered a sell signal, and ADX indicates a neutral trend. Oscillators including RSI (14.67), Stoch RSI, CCI, and BBP are deeply oversold or skewed toward sellers, as confirmed by the Awesome Oscillator, with low volatility and prices near the day's range low. No major divergences appear across momentum or oscillators.

Downside risk dominates as range holds unless key resistance breaks

Over the next 23 trading days, the expected range is ¥158.96 to ¥160.56, reflecting the typical volatility band for this pair. The probability for a downward move stands at 77%, while an upward reversal carries a 23% likelihood. The base case scenario projects sideways movement within this range, with a bullish breakout requiring a push above ¥160.11 and a further bearish extension likely if prices fall through ¥158.96.

Viktoras Karapetjanc, macro and fundamental analyst at Traders Union, believes the yen remains fundamentally weak despite recent official warnings and policy tightening steps. He sees persistent U.S. strength and robust capital outflows from Japan as key drivers favoring the US Dollar. Technical signals point to oversold conditions, yet underlying demand for dollars stays resilient. "Until the yen regains fundamental support or the dollar loses momentum, I expect USD/JPY to remain buoyant within the broader uptrend."

Earlier, analysts noted that USD/JPY had shifted to a bearish stance as price action slipped below key moving averages and momentum weakened. The current backdrop strengthens this view, with entrenched oversold readings across multiple indicators and a high probability of continued downside making ¥158.96 the critical support level to monitor for a potential renewed leg lower.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.