USD/JPY Price Forecast: Pair seeks to move back above 20-day EMA

• USD/JPY climbs towards 157.80 as the Japanese Yen lags its peers.
• Unchanged interest rates are expected from both the Fed and the BoJ this week.
• A BoJ interest rate increase is anticipated at the December policy meeting.

A 0.22% rise puts the US Dollar (USD) at around 157.80 against the Japanese Yen (JPY) in Tuesday’s European trading. The Yen remains weaker than its peers as caution prevails ahead of Friday’s monetary policy announcement from the Bank of Japan (BoJ).

BoJ expected to hold on Friday as December hike pricing points to stronger Yen support

The Bank of Japan is "widely expected to keep rates on hold at 1.25% and assess September’s 25bps hike before tightening again.", according to analysts at Brown Brothers Harriman (BBH). Emphasising Governor Kazuo Ueda’s cautious stance, they recall that "in September, BoJ Governor Kazuo Ueda warned that rapid rate hikes could unsettle asset prices, adding that it could take some time to confirm that 2% inflation is entrenched."

BBH describes a more hawkish shift in market expectations for monetary policy, noting that "the swaps curve price in 75% odds of a 25bps BoJ rate hike to 1.50% at the December 18 meeting and nearly 75bps of tightening in the next twelve months."

Wednesday’s monetary policy announcement from the Federal Reserve (Fed) will be the principal catalyst for USD/JPY before the BoJ delivers its decision. The CME FedWatch tool indicates that the Fed is almost certain to maintain interest rates within the 3.75%-4.00% range. With rates expected to remain unchanged, investors will scrutinise remarks on inflation and the economic outlook.

At the time of writing, a 0.16% gain takes the US Dollar Index (DXY) to near 102.20. The index measures the Greenback against six major currencies.

USD/JPY Retains a Mildly Bullish Technical Bias

At 157.86 on the daily chart, USD/JPY remains above its 9-period exponential moving average (EMA) of 157.69. Support from this short-term trend measure leaves the near-term outlook mildly bullish. Meanwhile, a Relative Strength Index (14) reading of around 51 indicates neutral-to-positive momentum, suggesting a modest edge for buyers without signalling overbought conditions.

The 9-period EMA at 157.69 provides the first downside support, underpinning the current rise; a break below it would be needed to indicate a deeper correction. As the latest dataset identifies no nearby technical resistance, further gains appear favoured while USD/JPY stays above this moving average. Any fresh highs, however, would probably prompt closer examination of momentum for signs of exhaustion.

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