FX.co ★ Wiking | USD/JPY

USD/JPY is making steady gains for the third straight day, trading at 157.01 in the European session on Tuesday. The pair is consolidating after the recent correction but remains constrained by the medium-term trend filter. The current price is above the nine-period Exponential Moving Average (EMA) but below the 50-period EMA, suggesting a neutral to slightly bearish near-term view as the overall rally pauses under this dynamic resistance. The 14-day RSI of 53.48 shows mildly rising momentum and suggests selling has eased, though it has not yet reversed; meanwhile, the daily chart shows USD/JPY rallying within an ascending channel. Musalem of the Fed took an especially hawkish tone, with his 8/10 FXS Speechtracker rating above the past average of 7.4/10, indicating a strong emphasis on further monetary tightening. According to Musalem, if policy does not tighten further, inflation will stay significantly above 2% over the next 18 months because of broad price pressures from both demand and supply, with supply-side shocks observed beyond oil (including copper). Core inflation is also staying "too high" at about 3%, as business prices are set at 3%. The shift toward "earlier and incremental" interest rate hikes versus "later and larger" suggests a strong likelihood of more increases in the Dollar policy interest rate, given that the labor market is assessed as close to full employment and is not driving inflation pressures. The FXS Fed Sentiment Index rose 0.42 points to 149.96, remaining in hawkish territory, consistent with Musalem's view that additional rate hikes are needed to combat ongoing inflation. This high index level, well above the neutral line of 100, reflects the speech's contribution to the overall Fed narrative, as monitored by the FXS Speech tracker. USD/JPY might test the initial resistance at the 50-day Exponential Moving Average (158.08), then try to break through the upper line of the rising channel near 158.60. A successful breakout above this level will support the positive trend and help the currency pair reach a near 40-year high of 163.99, seen on July 23. On the downside, the main support level is the 9-day EMA at 156.41, followed by the lower line of the rising channel at 154.60. A break below the channel could lead to the 11-month-low level at 152.10.