Dollar-Yen pair remains capped by 50% Fibonacci retracement as September Fed rate hike expectations soften.
The USD/JPY pair traded flat on Thursday, constrained below the 159.50 level, as diminishing expectations for a Federal Reserve interest rate hike in September weighed on the Dollar. The 50% Fibonacci retracement of July’s sell-off continues to act as a key resistance barrier, limiting upside momentum.
Analysts noted that while near-term inflation risks remain tilted higher, the Fed can afford patience. Markets slightly reduced rate hike pricing following in-line U.S. CPI data, though the broader bearish bias for the Dollar persists. Technical indicators show a bullish near-term trend, but momentum is fading, with the 4-hour RSI at 57.22 and MACD flattening near zero.
The 160.00 level remains a critical psychological threshold, with Tokyo authorities likely to monitor any approach closely. The pair’s inability to break above 159.50 keeps the focus on downside risks in the near term.