USD/JPY Price Forecast: Climbs back above mid-160.00s as BoJ rate decision looms

The USD/JPY pair is seen building on the previous day's late recovery from sub-158.00 levels, or the lowest since May 14, and gaining positive traction during the Asian session on Friday. Spot prices climb back above the 160.50 level amid the emergence of some US Dollar (USD) buying and some repositioning trade ahead of the highly anticipated Bank of Japan (BoJ) rate decision.

From a technical perspective, strength beyond the 160.00 psychological mark and the 38.2% Fibonacci retracement level of the sharp corrective pullback from a four-decade peak backs the case for further intraday gains. However, the 14-period Relative Strength Index (RSI) near 31 and a negative Moving Average Convergence Divergence (MACD) reading around -0.43 suggest lingering downside pressure.

Hence, any further move up is more likely to confront stiff resistance near a dense Fibonacci band led by the 50.0% retracement at 160.99 and further capped by the 61.8% and 78.6% retracements at 161.69 and 162.69, respectively. Bulls would need to clear the said barriers to ease immediate pressure and pave the way for a rise back towards the cycle high region at 163.97.

On the downside, initial support is seen at the 38.2% Fibonacci retracement at 160.28, ahead of the 23.6% level at 159.41 and the structural swing low zone at 158.00. A convincing break and acceptance below the handle will be seen as a fresh trigger for bearish traders and pave the way for an extension of the suspected intervention-led corrective decline.

USD/JPY 4-hour chart