157.00 reclaimed: USD/JPY Price Forecast as firmer USD supports further recovery from one-month low

• 156.00 draws buyers to USD/JPY. The pair reached a one-month low near this level on Friday.
• A solid USD rebound lifts the pair, but expectations of a BoJ rate hike may limit gains.
• Technical signals also call for caution before taking positions for further gains.

156.00 marks the area of Friday’s low, the weakest USD/JPY level in over a month. A solid intraday recovery from that area leaves the pair modestly higher in early European trading. Broad US Dollar (USD) strength is helping spot prices attempt to extend gains beyond 157.00, although a substantial weekly loss still looks likely.

Markets assign around an 80% probability to a US rate increase by year-end as oil-related inflation risks persist. That pricing remains in place even as investors increasingly accept that the Federal Reserve (Fed) will leave rates on hold next week. Escalating Middle East tensions are also sustaining the geopolitical risk premium and renewing demand for the safe-haven USD. This is encouraging some covering of short USD/JPY positions.

Expectations of an imminent Bank of Japan (BoJ) interest rate increase were reinforced by Japan’s National Consumer Price Index (CPI) report released earlier today. Traders are also closely monitoring speculation that further Japanese Yen (JPY) weakness could prompt direct currency intervention by the authorities. Together, these factors may restrict USD/JPY gains before next week’s major central bank events.

On 28 October, the Fed will deliver its rate decision at the close of its two-day monetary policy meeting. The Bank of Japan (BoJ) meeting follows on 29-30 October. Next Thursday also brings the Advance US Q3 GDP release and the Personal Consumption Expenditures (PCE) Price Index. These data will shape USD trading and give USD/JPY a meaningful catalyst.

For technical traders, the overnight breach of 157.50 support was viewed as a significant bearish trigger. That level corresponds to the 23.6% Fibonacci retracement of September’s advance and the lower edge of a trading range established three weeks ago. Repeated recent failures to hold above the 200-day simple moving average (SMA) at 158.55 add to the bearish picture, suggesting that USD/JPY’s path of least resistance remains lower.

Fading upward momentum is also indicated by the Moving Average Convergence Divergence (MACD). Its MACD line sits below the signal line, both are close to zero, and the histogram is slightly negative. At 43.77, the Relative Strength Index (RSI) is below its midpoint. This supports a corrective bias rather than a strong directional trend and suggests that subsequent rallies could attract selling.

The first upside hurdle is the 23.60% retracement at 157.56, followed by the 200-day SMA at 158.55. Clearing this resistance cluster would bring the cycle-high anchor near 158.98 into focus. Support begins at the 38.20% retracement at 156.68, with the 50.00% level at 155.98 next. Further Fibonacci support lies at 155.27 and 154.26, while the 152.97 area forms the broader structural floor for the current swing.

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

USD/JPY: daily price chart