Over the past 24 to 48 hours, the USD/JPY pair has continued its downward trajectory, hovering near a one-week low. With yesterday’s closing price at 153.61, down significantly from the 154.36 open, the market reflects growing concerns about persistent dollar weakness. The recent decline has been driven by disappointing US economic data and falling US Treasury yields, prompting investors to adopt a cautious stance ahead of the key upcoming US nonfarm payroll report.

Reports highlight that the election of Japan’s new Prime Minister Sanae Takaichi and expectations of her policy direction have strengthened the yen, adding to the pressure on USD/JPY. Furthermore, the market remains on edge awaiting the US nonfarm payroll data, which if weaker than expected, could deepen the dollar’s struggle and lead to a further decline in the pair. For the average investor, this scenario resembles waiting for an important economic report card while the yen gains strength due to political stability, causing the dollar to appear weaker and the exchange rate to trend downwards in the near term.

Daily Chart

The daily chart shows that USDJPY has followed a downtrend since the start of the year, falling from a high around 159 to the current level near 153.6. The 200-day moving average support lies near 150.27, while the 50-day average at 156.29 remains above price, confirming a medium to long-term bearish trend. Bollinger Bands are contracting indicating reduced volatility but still favor downside momentum. The MACD is below zero with the signal line and histogram confirming ongoing bearish momentum.

1H Chart

In the 4-hour chart covering the last 3-5 days, USDJPY is fluctuating within a range between 153.90 and 154.34. Short-term moving averages (7 and 21 periods) have formed a bearish crossover, and price repeatedly tests the lower band support. The MACD shows a downward cross indicating increased short-term bearish pressure. The recent presence of a bearish engulfing candlestick pattern further supports the continuation of near-term weakness, endorsing a short-biased stance.

Technical Trend:  Bearish Consolidation

Technically, USDJPY is in a bearish consolidation phase, with key short-term signals including a MACD bearish crossover and resistance at the lower Bollinger Band. The dominant technical pattern is a recent bearish engulfing candle, pointing to a continuation of the downward trend. Traders should monitor the crucial 154.00 support level, which will likely determine the next major move in the pair.

Today’s economic data primarily feature China’s January Consumer Price Index and Producer Price Index released early in the Asian session (HKT, GMT+8), which have limited impact on USDJPY. The key event is the US Non-Farm Employment Change and Unemployment Rate scheduled at 14:30 GMT+1, expected to significantly influence the USD. Stronger-than-expected data may boost the dollar, while weaker outcomes could increase downside pressure on USDJPY.

Resistance & Support

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