USD/JPY Slides to Two-Week Lows as Geopolitical and Fiscal Jitters Boost Yen Demand
Technical Analysis:
USD/JPY dropped firmly to a fresh two-week low during Thursday’s session, trading down to 143.30 on EBS as deteriorating sentiment surrounding U.S. assets triggered increased yen buying. Persistent uncertainties stemming from unresolved U.S. fiscal concerns, weakening foreign demand for Treasuries, and heightened geopolitical tensions—notably surrounding U.S.-China chip relations—collectively pressured U.S. asset prices and supported yen gains. Additionally, a soft U.S. 20-year Treasury auction—which pushed yields to their highest since November 2023—further dampened sentiment, prompting investors to reduce risk and seek safety in the yen.
From a technical perspective, USD/JPY continues to reflect a clear bearish bias, emphasized by its current pattern of lower highs established over recent trading sessions. Immediate resistance now emerges prominently at the Ichimoku baseline area of 144.27–144.47, closely aligning with the descending 21-day moving average currently situated at 144.47. A sustained close above these levels would be required to meaningfully disrupt the bearish outlook. Further overhead resistance is then seen at the Ichimoku cloud bottom near 145.69, marking a major hurdle for any bullish attempts. Momentum indicators, such as the daily RSI, have tilted downward, underscoring the bearish momentum.
On the downside, significant near-term support lies initially at the May 6 low of 142.36. A decisive breach below this level would put in immediate focus the April 22 high at 141.68, a critical support point that could open the door for a deeper decline toward the psychological 140.00 level, close to the year-to-date low at 139.89. Moreover, the unresolved hourly chart price gap at 142.47–142.52 from May 6 provides additional bearish impetus, suggesting further potential for declines. Traders remain cautious ahead of upcoming G7 meetings, maintaining elevated demand for yen call options (particularly 140 strikes), reflecting growing downside risks and the potential for further yen appreciation in the short term.