USD/JPY Price Forecast: Consolidates near 158.55/38.2% Fibo. before the next leg up

The USD/JPY pair extends the range play through the Asian session on Friday, stalling this week's solid recovery from its lowest level since May, touched in the aftermath of a joint US-Japan intervention. Spot prices currently trade near the top end of the weekly range, around mid-158.00s, as traders keenly await the crucial US Nonfarm Payrolls (NFP) report for a fresh impetus.

In the meantime, persistent geopolitical uncertainties, reviving inflation fears, and bets for at least one interest rate hike by the US Federal Reserve (Fed) act as a tailwind for the US Dollar (USD). The Japanese Yen (JPY), on the other hand, remains depressed on the back of concerns about Japan's worsening fiscal condition. Moreover, a fall in Japan's Household Spending for the seventh straight month weakens the case for a Bank of Japan (BoJ) rate hike in September, further weighing on the JPY and acting as a tailwind for the USD/JPY pair.

From a technical perspective, spot prices keep a capped tone near the 38.2% Fibonacci retracement level of a sharp slide from a four-decade high, touched in July. Meanwhile, the Moving Average Convergence Divergence (MACD) now prints in positive territory, hinting at improving short-term momentum on the 4-hour chart. However, the Relative Strength Index (RSI) around 50 suggests a neutral, consolidative backdrop rather than a decisive trend shift, making it prudent to wait for a move beyond the current level before placing fresh bullish bets.

A further move up beyond the 38.2% Fibo., near 158.55, is likely to confront resistance at the 50.0% retracement at 159.61 and the 61.8% level at 160.66, where further rallies could stall. On the downside, initial support appears at the 23.6% retracement at 157.26, ahead of the structural floor near 155.17. A sustained break below 157.26 is likely to open the way for a deeper correction toward that lower zone.

USD/JPY 4-hour chart