Over the past 24 to 48 hours, USD/JPY has experienced significant volatility, with yesterday’s closing price at 159.037. The US dollar faced pressure due to sliding US Treasury yields and rising stock markets, pushing the dollar index to a six-week low. This weakness in the dollar directly impacted the USD/JPY rate, causing it to retreat from recent highs and dip below the 159 level.

Moreover, optimism around recent US-Iran peace talks combined with a below-estimate US Producer Price Index (PPI) report added to the dollar’s downward pressure. This environment of easing geopolitical tensions and softer inflation data boosted the Japanese yen’s appeal. After hitting a 34-year low against the dollar, the yen sharply strengthened, reflecting a shift toward safe-haven buying and causing USD/JPY to pull back.

For the average investor, the past couple of days felt like a test of market sensitivity and sentiment. The glimmer of peace between the US and Iran reduced global political risk, pushing the safe-haven yen higher. At the same time, eased inflation pressures signaled by the PPI report subdued the dollar. As a result, investors have seen a temporary dip in the dollar, which translated to USD/JPY retreating and creating an opportunity to reposition.

Daily Chart

The daily chart depicts a sustained uptrend in USDJPY over recent weeks, with prices well above the 50-day (157.42) and 200-day (153.19) moving averages, reflecting long-term bullish momentum. However, the pair is nearing the yearly high of 160.23, facing significant resistance ahead. Bollinger Bands show reduced volatility as the bands contract, while the MACD histogram signals declining momentum. Overall, the daily trend remains bullish but signals caution for potential pullbacks or consolidation phases.

1H Chart

On the hourly chart over the past 3-5 days, USDJPY has oscillated between 158.7 and 159.1, with short-term moving averages like the 20 EMA converging. The MACD shows signs of a potential bearish crossover, and RSI is trending lower, signaling weakening short-term bullish momentum. The recent formation of a three-day sequence of small bearish candlesticks indicates increased selling pressure and the likelihood of further downside testing within the next 24 hours.

Technical Trend:  Cautiously Bearish — Overall bullish structure under short-term correction pressure with heightened volatility.

Technically, USDJPY’s recent strong rally faces resistance around the 159-160 area, with momentum waning as indicated by a softening MACD and bearish candlestick patterns emerging. The robust Japanese machinery orders add fundamental support to the Yen, implying downside risk for USDJPY if the Dollar continues to falter. Volume remains a crucial watchpoint—should USDJPY break above 159 with strong volume, it may trigger renewed bullish momentum for further gains.

Among today’s GMT+1 economic events, Japan’s February machinery orders surged an unexpected 13.6% month-on-month, vastly outperforming the -1% forecast and prior -5.5% reading. This strong industrial activity data supports the Yen. Meanwhile, no significant US releases directly affecting USDJPY are scheduled, suggesting Japanese data will weigh more heavily on the pair in the near term, potentially curbing further USDJPY advancements.

Resistance & Support

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