USD/JPY Trapped in Tight Range; Bears Eye 142.05 Amid Fed and BOJ Event Risks
Technical Analysis:
USD/JPY remained firmly confined within a tight trading band of 142.61–143.60 on Tuesday, signaling considerable market indecision ahead of key policy guidance from Fed Chair Jerome Powell and critical U.S.–Japan trade discussions later this week. The formation of a doji candle near the lower boundary of the Bollinger bands highlights a market balanced delicately between cautious optimism and lingering bearish sentiment. Notably, the pair’s consistent pattern of lower highs over recent sessions continues to underscore prevailing bearish pressures, with volumes declining and volatility easing amid a lack of directional conviction from equity markets.
Immediate technical focus remains firmly on critical support at last Friday’s low of 142.05. A decisive break below this level would clearly signal renewed bearish momentum, potentially triggering accelerated losses toward subsequent support clusters at 141.65–68, representing lows from September 20 and August 5, followed closely by a significant technical floor at 140.92—the September 16 low. Such a bearish scenario would likely unfold rapidly if trade negotiations disappoint or if Powell’s comments lean dovish, increasing market bets on U.S. rate cuts and further compressing U.S.–Japan yield spreads in the yen’s favor.
On the upside, meaningful resistance remains entrenched near Monday’s intraday high of 144.36, and more critically around the 144.55–144.60 region marked by April 4 and April 11 lows. Bulls would require a sustained daily close above 144.60 to effectively neutralize current bearish sentiment and possibly open upside momentum toward the psychological 145.00 barrier. However, given the cautious market backdrop—highlighted by mixed crosses and a weakening EUR/JPY pair slipping below key moving averages—bullish attempts will likely remain limited and vulnerable until clearer policy signals emerge from both the Fed and BOJ later this week.