USD/JPY Price Forecast: Trades above 153.50 ahead of US inflation; bearish bias remains

Market impact: bearish bias, but highly event-sensitive.

The immediate pressure on USD/JPY comes from two reinforcing forces: markets are reassessing the potential for a more hawkish Bank of Japan, while the pair has technically broken below the 155.20–155.30 area and remains below the cited 154.87 retracement level. That combination weakens the dollar-yen trend and keeps downside momentum dominant.

The key near-term catalyst is US inflation. A softer-than-expected September 10 PPI or September 11 CPI would likely reduce US rate expectations and Treasury yields, undermining the dollar and increasing the probability of a move toward the article’s identified 152.03 support. A sustained break there would expose the 149.18 region, although those are technical reference points rather than guaranteed targets.

A hotter inflation outcome would create the principal bullish counter-scenario for USD/JPY: higher US yields and reduced expectations for Federal Reserve easing could trigger a dollar rebound and short-covering. However, the pair would still face resistance near 154.87, with the broader recovery case requiring a move back above that area and subsequently the 155.20–155.30 breakdown zone.

The bearish setup is not one-sided. The reported RSI near 26 indicates oversold conditions, increasing the risk of a corrective bounce even if the broader trend remains lower. A US inflation surprise that supports the dollar, a moderation in BoJ expectations, or a broader risk-off move that favors dollar liquidity could temporarily invalidate the downside bias.

Trading focus:

US PPI and CPI, US Treasury yields, Fed-rate pricing, further BoJ repricing, and whether USD/JPY holds above or breaks below 152.03. The initial impact should be treated as short-term and event-driven; a more durable bearish trend would require continued support from both softer US rate expectations and a hawkish BoJ outlook.