USD/JPY Price Forecast: 158.00 caps upside as the pair consolidates near January 2025 highs

The Japanese Yen (JPY) gains modest ground against the US Dollar (USD) at the start of the week as the Greenback comes under pressure across the board, following reports of a criminal probe involving Federal Reserve (Fed) Chair Jerome Powell that have unsettled market sentiment.

At the time of writing, USD/JPY trades around 157.75, holding close to its highest level since January 2025. The pair lacks strong follow-through selling, with Japan-China tensions and speculation over a possible snap election in Japan’s lower house keeping the Yen on the defensive.

That said, the upside in USD/JPY also appears capped for now, as sustained weakness in the Yen could revive intervention risks, with the currency hovering near levels that previously prompted both verbal and direct intervention from Japanese authorities.

From a technical perspective, USD/JPY remains in a steady uptrend, trading well above its key moving averages on the daily chart. The 21-day Simple Moving Average (SMA), near 156.48, is acting as immediate support.

A decisive break below this level could expose the December low around 154.50, followed by a strong demand zone near 153.00, which closely aligns with the 100-day SMA at 152.73.

On the upside, the 157.80-158.20 region continues to cap gains, as reflected in the rejections seen in November and December. A sustained break above this zone would strengthen bullish momentum and open the door toward the 160.00 psychological mark, last seen in July 2024.

Momentum indicators support the upside bias. The Moving Average Convergence Divergence (MACD) histogram has turned positive near the zero line, with the MACD line above the signal line, pointing to improving bullish momentum.

Meanwhile, the Relative Strength Index (RSI) stands at 62, remaining in bullish territory without flashing overbought conditions.