USD/JPY Price Forecast: Holds around 159.00, nearly three-week top amid geopolitical risks

The USD/JPY pair trades with positive bias for the seventh straight day and is currently placed around its highest level in nearly three weeks, with bulls looking to extend the momentum beyond the 159.00 mark. The US Dollar (USD) regains positive traction amid persistent geopolitical uncertainties and bets that the US Federal Reserve (Fed) will hike interest rates by the end of this year. Furthermore, economic concerns stemming from the Middle East conflict undermine the Japanese Yen (JPY) and act as a tailwind for the USD/JPY pair. The uptick seems unaffected by Japan’s upbeat Q1 GDP and intervention fears, suggesting that the path of least resistance for spot prices is to the upside. From a technical perspective, the USD/JPY pair maintains a bullish near-term bias above the 158.55 confluence – comprising the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 61.8% Fibonacci retracement level of the April-May fall. That said, the Relative Strength Index (14) at 73.34 sits in overbought territory, hinting at stretched upside conditions, while the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory. Momentum indicators, in turn, suggest that upward momentum is starting to wane even as the price action remains supported. Hence, any subsequent move up might confront immediate resistance at the 78.6% Fibo. retracement at 159.49, followed by the 160.00 psychological mark and the cycle high area at 160.72. On the downside, the 158.55 confluence might continue to offer initial support. A convincing break below there would expose the 50% retracement at 157.86, with further downside levels emerging at 157.18 and 156.35 before the broader structural floor near 154.99.