USD/JPY Price Forecast: Bulls Regain Control as USD/JPY Eyes Multi-Decade High Above 162.80 USD/JPY has started the new week with renewed strength, erasing nearly all of last week's corrective decline and once again placing the multi-decade peak near 162.84 within striking distance. The rebound reflects a market that remains firmly biased toward the upside despite repeated verbal intervention warnings from Japanese authorities. Traders appear increasingly comfortable buying dips, encouraged by the persistent policy divergence between the Federal Reserve and the Bank of Japan. While softer US economic data has slightly reduced expectations for further Fed tightening, the yield advantage still favors the US Dollar. As a result, the latest recovery looks less like a temporary bounce and more like a continuation of the broader bullish trend that has dominated the pair for months. Nevertheless, with prices approaching historically sensitive territory, volatility could rise quickly as traders balance technical momentum against intervention risks. The daily chart continues to paint a constructive picture. Last week's retreat toward 160.47 found buyers exactly where many trend followers expected them to appear, around the 23.6% Fibonacci retracement of the broader 155.02–162.84 advance. That orderly correction has now been followed by a strong bullish reversal candle, confirming that demand remains healthy on pullbacks rather than only at breakout levels. Price has reclaimed ground above the short-term moving average while remaining comfortably above the medium and long-term averages, all of which continue to slope higher. This alignment reflects a well-established uptrend that remains technically intact. Immediate resistance sits at 162.84, and a convincing break above this level would expose territory not visited since the mid-1980s. On the downside, initial support now stands near 161.30, followed by the stronger demand zone around 160.50, where buyers recently stepped back into the market. Momentum studies reinforce the improving technical outlook. The MACD remains firmly in positive territory, although the histogram has flattened slightly after the recent correction, suggesting bullish momentum paused rather than disappeared. The Relative Strength Index has recovered toward the mid-60s, comfortably above the neutral threshold without entering deeply overbought territory. That leaves room for another leg higher if buying interest accelerates. Meanwhile, the Stochastic oscillator has begun turning upward after cooling from previous highs, hinting that fresh upside momentum may be building again. Taken together, these indicators suggest the broader trend continues to favor buyers, though the pace of gains may become more measured as the pair approaches significant psychological and historical resistance levels. Fundamentally, the market remains focused on interest rate expectations and policy divergence. Although weaker US employment data has encouraged speculation that the Federal Reserve could become more cautious in the coming months, US yields remain considerably higher than those available in Japan. At the same time, the Bank of Japan continues to move very gradually away from its ultra-loose monetary stance, leaving the yield differential largely intact. Traders are also preparing for the upcoming FOMC minutes, hoping for greater clarity regarding future policy direction after recent dovish remarks from Federal Reserve officials. Any indication that policymakers remain reluctant to ease aggressively could reinforce Dollar strength and provide another catalyst for USD/JPY to challenge fresh highs. The bullish case therefore remains compelling, but it is not without meaningful risks. A sustained break above 162.84 could trigger another wave of momentum buying and potentially extend the rally into price levels not seen since 1986. However, intervention concerns cannot be ignored. Japanese officials have repeatedly emphasized their readiness to respond if currency movements become excessively rapid or disorderly. Even if actual intervention remains absent, increasingly forceful verbal warnings could temporarily unsettle speculative long positions. Likewise, any unexpectedly dovish shift from the Federal Reserve or another disappointing round of US economic data could reduce Treasury yields and encourage a broader Dollar correction. For now, the path of least resistance still points upward. The recent correction appears to have refreshed bullish momentum rather than damaged the prevailing trend, and technical indicators continue to support the case for further appreciation while key support levels remain intact. Even so, this is a market trading near historically important territory where sentiment can shift quickly on policy headlines. Traders will likely continue buying controlled pullbacks, but they should also remain alert to sudden volatility driven by central bank communication or potential intervention. As long as USD/JPY holds above its recent support base, the broader outlook favors another attempt on the multi-decade high, with a successful breakout potentially opening the next chapter in the pair's long-running bullish trend.
