The U.S. dollar has seen a strong rebound against the Japanese yen lately, climbing over 6% from its yearly low. But the momentum hit a wall this week, stalling right at a key long-term downtrend. As the market takes a breather, traders are watching closely to see if this is just a pause or the beginning of a deeper reversal.
For now, the USD/JPY pair is holding within its weekly trading range, with a breakout still pending. Much of the market’s next move may hinge on upcoming U.S. economic data, particularly retail sales and consumer sentiment figures expected later this week.
Key Levels to Watch
On the resistance side, the pair faces pressure near 148.67 to 148.74, followed by stronger ceilings around 149.50 to 149.60. If buyers manage to push through this zone, it could open the door toward a much larger breakout, potentially testing the 151.63 to 151.95 area home to significant historical highs.
Support, meanwhile, sits around 145.92 and more critically near 145.30 to 145.37. A break below this zone would hint that the recent high might have been a top, possibly signaling a return to the broader bearish trend. Additional downside targets lie near 143.05 to 143.24 and further down at 141.56.
Zooming Into the Price Action
A closer look at the 4-hour chart shows USD/JPY still respecting an upward-sloping pitchfork channel. The lower boundary of this channel intersects with the key support levels mentioned above making this area an important battleground for short-term direction. If bulls can hold the line, we might see another attempt to clear resistance. But if support gives way, the pair could quickly unravel toward lower levels.
What Traders Should Keep in Mind
The pair’s reaction at current levels could set the tone for the weeks ahead. A breakout above the 200-day moving average and downtrend resistance would shift the technical outlook to bullish. Until then, it’s a wait-and-see scenario with high-impact data on deck.
Retail traders and investors should keep an eye on this week’s U.S. data releases, which may offer the catalyst needed to shake USD/JPY out of its range. As always, it’s wise to stay flexible and monitor how the market reacts around these key zones.
