- Summary:
- The USDJPY pair rose on Tuesday, but the resent selloff has created an undercurrent that will likely keep the dollar subdued below 154.00.
USDJPY ended a five-session losing streak on Tuesday, rising by 0.5 percent to trade at 144.92 in the intraday session. On Monday, the currency pair touched the lowest level since December 2023, underlining the strong impact of recent monetary policy decisions by the Bank of Japan (BoJ) and a series of weak economic data from the US.
The yen had kept the dollar under pressure following the BoJ’s decision to raise interest rates higher-than-expected. Also, the central bank announced a 3 billion yen cut on it bond purchase plan effective Q1 2026. Nonetheless, the dollar’s gains will be limited by the recent weak macroeconomic data and expectations around Fed interest rate cuts from September.
Momentum indicators and why a return to 154.00 matters
On the 4-hour price chart, the 20-EMA is still below the 50-EMA despite USDJPY’s gains today. That means that the selling momentum still outweighs the buying momentum. Also, the RSI is at 34, adding support to the downside view. Notably, there was a downside breakout around the 154.00 mark following a long period of sideways action. Therefore, a return to that mark could be significant in building a stable upside momentum.
Support and resistance levels
The USDJPY currency pair will likely continue the upside if it manages to go above 145.23 in the near term. That could result in a stronger upward movement to the first resistance mark at 146.00. A break above that mark will strengthen the upside momentum and could take the pair further up to test 146.80.
Conversely, the sellers will likely take control if the price stays below 145.23, in which case the first support could be established at 144.31. However, extended control by the sellers could breach that support, at which point the upside narrative will be invalid. Furthermore, the resulting momentum could drive the pair lower to find the second support level at 143.50.
