USD/JPY Bears Take Control as Key Support Levels Break
USD/JPY has experienced a sharp decline, retracing over half of Wednesday’s gains as it falls below critical technical levels. The break beneath the 100-day moving average (153.25) and the daily Ichimoku cloud base (153.60) signals a bearish shift in sentiment. The pair is now eyeing the 200-day moving average at 152.74, which serves as the next major support level. With U.S. Treasury yields falling after softer-than-expected PPI data, the downside momentum has intensified. The weakening dollar, combined with a fresh year-to-date low in WTI crude oil prices, further fuels yen strength. The options market reinforces this bearish view, as risk reversals favor yen calls, indicating heightened expectations of further declines.
The technical structure continues to favor the downside, with resistance levels forming at 153.60 (cloud base), 153.82 (55-DMA), and 154.40 (21-DMA). Unless USD/JPY reclaims these levels, sellers are likely to remain in control. The broader macroeconomic environment aligns with this technical bias, as market participants anticipate potential Fed rate cuts, keeping U.S. yields under pressure. Additionally, Japan’s inflation trajectory supports the Bank of Japan’s tightening stance, adding a fundamental tailwind for yen bulls. If downside pressure persists, a confirmed break below 152.74 could open the door to further declines toward the psychological 152.00 handle.
From a broader perspective, USD/JPY remains vulnerable as global risk sentiment improves and the market anticipates progress in Ukraine negotiations. Historically, the pair traded around 115 at the onset of the war in 2022, indicating substantial downside potential if geopolitical developments drive a sustained risk-off shift. With the dollar losing ground and back-end volatilities rising, yen strength could persist, especially if Treasury yields remain on the defensive. As long as USD/JPY stays below the pivotal 155.00 resistance zone, the bearish trend remains intact.