USD/JPY Price Forecast: 155.20 Resistance Puts Bulls to the Test

USD/JPY is approaching a critical technical barrier near 155.20 as traders prepare for policy decisions from both the Federal Reserve and Bank of Japan. The pair has recovered toward 154.87–155.00, but the rebound remains capped below resistance that could determine whether the recent yen recovery ends or extends.

The timing matters. Markets are pricing roughly a 94% probability of a 25-basis-point Fed increase on Wednesday, while the BoJ is widely expected to raise rates by another 25 basis points on Friday. That opposing policy mix creates the potential for sharp two-way moves in the yen.

Fed Hike Supports the Dollar

The dollar has regained ground as stronger U.S. inflation and employment data increase expectations for tighter monetary policy. Reuters reported Tuesday that the probability of a September Fed hike had risen to about 94%, while the U.S. 10-year Treasury yield climbed to around 5.03%, its highest level since 2007.

Higher Treasury yields generally support the US Dollar because they increase the return available from dollar-denominated assets. For USD/JPY, the yield gap between the United States and Japan remains a central driver of the exchange rate.

That support could limit the yen’s gains even as traders anticipate a more aggressive BoJ. Reuters says the Japanese central bank is expected to raise its policy rate to 1.25% on September 18, marking its second increase in three months. Analysts also expect further tightening if inflation remains elevated.

155.20 Tests the Bearish Setup

The supplied daily chart shows USD/JPY at 154.87, below the 155.20 neckline of a bearish Head and Shoulders pattern. The Relative Strength Index (RSI) near 37.70 has recovered from deeper weakness but remains below the neutral 50 level, while MACD remains below zero.

That combination suggests the recent rebound has not yet changed the broader bearish structure.

A sustained daily close above 155.20 would weaken the Head and Shoulders setup and shift attention toward the September 4 high near 156.75. Beyond that level, the 200-day Simple Moving Average (SMA) near 158.40 becomes the next major technical reference.

Conversely, another rejection at 155.20 would strengthen the case for renewed yen appreciation.

Yen Gains Raise Downside Risk

The Japanese currency has already staged a significant recovery. Reuters reported that the yen reached a seven-month high of 152.89 per dollar, supported by expectations that the BoJ may tighten policy faster than previously anticipated.

Japanese authorities have also shown a willingness to intervene in foreign-exchange markets. Finance Ministry data showed Japan spent a record 15.4 trillion yen, or $96.5 billion, supporting the currency between July 30 and August 26.

For USD/JPY, the key levels are:

• Resistance: 155.20
• Breakout targets: 156.75 and 158.40
• Immediate downside: 152.20
• Head-and-Shoulders target: around 146.60

A failure at 155.20 would return the 152.20 area to focus. A sustained break below that zone would strengthen the bearish pattern and potentially open the path toward 146.60, the measured Head and Shoulders objective.

Conclusion

USD/JPY is approaching a decisive 155.20 test with monetary policy pulling the pair in opposite directions. Near-term dollar support comes from elevated U.S. yields and firm Fed hike expectations, while the yen is benefiting from expectations for a 1.25% BoJ rate and potential further tightening. Technically, 155.20 remains the key dividing line. A confirmed break would expose 156.75 and 158.40, while rejection keeps 152.20 and potentially 146.60 in focus.