USD/JPY Talking Points:
- USD/JPY was on the verge of a possible breakdown to start the week, with sellers showing resistance at 150.77 on Friday to keep the pair below the 150.00 handle.
- This week has been a trap for bears so far, however, as supports at 149.23 and 148.65 didn’t yield much ground to bearish breakdowns, and now the pair is bouncing back for another test of the 150.00 big figure.
It’s still not out of the woods yet, but so far USD/JPY has put in a sizable bounce from the support test at four-month-lows from Tuesday and Wednesday of this week. I had highlighted this price in the webinar on Tuesday, at 148.65 which was the spot that held the lows in USD/JPY in December. This presents a stark contrast to a week ago when USD/JPY was breaking below the 150.00 level for the first time in 2025 and threatening a larger round of carry unwind which could hit several macro markets. But, so far, this week has been a trap for bears as sellers were unable to break much fresh ground at those fresh four-month lows.
USD/JPY Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY Compared to USD
The U.S. Dollar is putting in a sizable bounce on the daily, currently trading above last Thursday’s high, but notably, USD/JPY is still well below its own high from last Thursday. This indicates additional JPY strength and that’s something that could make the USD/JPY pair attractive for bearish-USD scenarios.
Given tomorrow’s data release of Core PCE, there would be an open pathway for something like that to take place. If tomorrow’s inflation shows below expectations, that further highlights the growing differential between Japanese and U.S. inflation, which could lead to a continued shift in rates with lower US rates and higher Japanese rates. This could, of course, further pressure carry unwind themes in the pair.
At this point, support is pretty clearly defined at 148.65. Below that, there’s a Fibonacci level at 148.13 and then a confluent zone around the 147-handle, specifically 146.95-147.18.
For resistance, 150 is already in-play but above that, the Fibonacci level at 150.77 was in-play last Friday to help hold the highs, with 151.51 and 151.95 above that.
USD/JPY Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Strategist
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