Yen Strengthens to Six-Month Peak as USD/JPY Slides Below Key Support

USD/JPY dipped sharply at the start of the week, falling more than 1% during Asian and European trading on Monday, as the pair attempted to resume a steep decline from the previous week that had briefly paused on Friday.

The Japanese yen gained from its multi-decade lows following the first intervention in late July and received additional momentum from a hawkish shift in Bank of Japan rhetoric, signaling a rate hike at the September policy meeting (with most economists anticipating a 25 basis point increase, though a 50 basis point rise remains possible). Trader sentiment has also shifted in favor of further yen long positions.

Today’s break below the 155.20 support zone (lows from August 3 and September 3-4) generates a bearish continuation signal following the completion of a bearish failure swing pattern on the daily chart. A drop below 154.78 (the 38.2% Fibonacci retracement of the 139.88/163.98 uptrend) would confirm the signal and open targets at the 152.00 zone (January 25 trough / 50% retracement) and 150.92 (the July 27, 2025 spike high).

Daily technical studies remain in a bearish configuration, with the recent formation of a 10/200 DMA death cross, though oversold conditions may create headwinds. Significant support is provided by the top of the rising thick daily cloud at 154.26.

Immediate resistance levels are located at 154.78 (the cracked 38.2% Fibonacci level) and 155.20, with stronger rebounds expected to be capped beneath the 156.50/75 zone to maintain bearish momentum and provide better selling opportunities.

Res: 159.17; 159.35; 159.59; 160.00
Sup: 154.05; 153.06; 152.26; 151.93

Source link