USD/JPY Outlook: Bullish Momentum Builds as Pair Tests Key Resistance

The USD/JPY pair closed at 155.12, with an intraday high of 156.54 and a low of 155.10. The pair has continued its sharp rally as dollar strength broadens across major currencies, now approaching the key psychological zone near 156.00. While momentum remains strong, early signs of short-term exhaustion are beginning to appear as buyers test historical resistance.

Key Technical Observations

Moving Averages Remain Bullish: The 15-day moving average (150.02) and 20-day moving average (149.43) are both sloping upward, confirming a strong bullish alignment. Price remains significantly above both averages, reinforcing upward momentum, though the current distance from the moving averages signals possible overextension.

Trend Structure: The pair has formed a clear higher-high and higher-low structure since mid-March, confirming an established uptrend. The breakout above the 150.00 level turned that area into a solid support base. However, the candles near 156.00 show upper wicks, hinting at short-term profit-taking pressure.

RSI Momentum: The RSI sits at 62.06, just below the overbought threshold. This reading confirms strong bullish momentum but also warns that upside could soon slow if RSI fails to break above 65–70.

Price Action Behaviour: The pair has entered a consolidation band after an impulsive rally. If momentum stalls below 156.00, a retracement toward 153.00 could unfold before the next bullish continuation attempt.

Macro & Market Context

Fed Policy Divergence: The Federal Reserve’s stance of delaying rate cuts continues to support the dollar, while the Bank of Japan’s ultra-loose policy keeps the yen weak. This widening yield gap remains the key macro driver behind the pair’s bullish trend.

Yen Intervention Risk: As the pair trades near historical intervention zones (155–157), verbal or actual action from Japan’s Ministry of Finance cannot be ruled out, which may trigger sharp but temporary pullbacks.

Market Sentiment: Strong U.S. economic data and elevated Treasury yields keep traders favouring USD exposure, while the yen remains pressured by carry-trade flows.

Key Levels to Watch

• Immediate Resistance: 156.50 – multi-month high and psychological level.
• Next Resistance: 157.30 – potential breakout extension level.
• Immediate Support: 153.00 – prior swing high and short-term pivot.
• Deeper Support: 150.00 – confluence of moving averages and round-number support.

Bias: Bullish but Overextended

The broader outlook remains bullish as long as the pair holds above 150.00. However, the rally is stretched, and a pullback toward 153.00 would be healthy for trend continuation. A daily close above 156.50 would confirm a breakout toward 157.30–158.00, while rejection at current levels could signal a short-term correction.

The setup favours buy-on-dip strategies toward 153.50–154.00, targeting 156.50–157.00, with stops below 150.00. RSI momentum still supports the bulls, but caution is warranted as the pair approaches intervention-sensitive territory.