USD/JPY Rallies Near 158.00 as Musalem's Hawkish Tone Supports Bullish Bias

The USD/JPY currency pair rose to near 158.00 on Tuesday, trading around 157.70 during European hours. This marks the third consecutive day of gains for the pair, which is consolidating after a recent pullback.

Despite being above the nine-period Exponential Moving Average (EMA), the price remains below the 50-period EMA, indicating a neutral to slightly bearish near-term tone. The 14-day Relative Strength Index (RSI) at 53.48 suggests modestly positive momentum.

Musalem's speech delivered a distinctly hawkish tone, with an 8/10 FXS Speechtracker score above the 7.4/10 historical average. Musalem warned that without further policy restraint, inflation is likely to remain substantially above the 2% target over the next 18 months.

The USD/JPY pair could target the immediate barrier at the 50-day EMA of 158.08, followed by the upper boundary of the ascending channel around 158.60. A successful break above this confluence resistance zone would reinforce the bullish bias and support the pair to explore the region around a nearly 40-year high of 163.99.