USD/JPY Price Forecasts: US Dollar dips after failing again at the 200-day SMA

• USD/JPY nears 158.00 after another rejection at the 200-day SMA around 158.55.
• Fading hopes of back-to-back Fed rate hikes and concerns about AI overinvestment are hurting the USD this week.
• The pair remains range-bound, with key support around 157.50.

The US Dollar (USD) posts moderate losses against the Japanese Yen (JPY) on Tuesday after being capped again at the 200-day Simple Moving Average (SMA) at 158.57. The USD/JPY pair retreats to the 158.00 area, weighed by dwindling hopes of Federal Reserve (Fed) rate hikes and concerns about AI overinvestment, although it remains within recent ranges, above the 157.50 support area.

The US Dollar is suffering this week as investors come to terms with the fact that the US central bank will stand pat on rates at next week’s monetary policy meeting. The odds for a quarter-point rate hike have dropped to 17% from nearly 60% last week, according to data by the CME’s Fed Watch Tool, after some Fed officials affirmed that they need more time to assess the impact of September's hike.

Beyond that, the growing concerns about the profitability of the AI sector are putting additional pressure on the US Dollar. The Greenback has been boosted by a massive injection of foreign investment in the sector during the last 12 months, and it is rational to believe that it will suffer if investors start to doubt the future of the technology.

Technical Analysis: Sideways consolidation between 157.50 and 158.50

From a technical perspective, the pair remains looking for direction, with bulls capped below the 200-day simple moving average (SMA) at 158.57, and downside attempts contained above the 157.50 area. Indicators in the daily chart show a mildly constructive bias, yet with momentum fading.

The Relative Strength Index (14) is hovering in neutral territory, just above the key 50 level, while the Moving Average Convergence Divergence (MACD) remains marginally positive, all in all hinting at a market that lacks a clear bias.

On the topside, bulls would need to breach the mentioned 200-day SMA at 158.57 to expose the September 24 high, just above 159.00, ahead of September's peak around 160.40. Bears, on the contrary, remain contained above the October 8 and 15 lows at the mid-157.00s, which is closing the path towards the late-September lows, near 156.40 and the September 17 low, at 155.34.

(The technical analysis of this story was written with the help of an AI tool. Know more.)