USD/JPY Bulls Eye Key Resistance Levels After Tariff Pause Sparks Sharp Rebound
Technical Analysis:
USD/JPY surged decisively higher on Wednesday, bolstered by improved risk sentiment after President Trump’s announcement of a 90-day pause in U.S. tariffs against China, causing a sharp rise in equity markets. The pair rebounded strongly, easing downside pressures as short-term Treasury yields climbed to their highest in over a week, flattening the yield curve and reinforcing bullish sentiment. The robust upward momentum pushed USD/JPY back above the lower 21-day Bollinger Band, located at 145.99, significantly easing the bearish technical conditions that dominated recent sessions.
The formation of a dragonfly doji candlestick on the daily chart is particularly noteworthy, suggesting a potential bullish reversal from recent lows. However, further bullish confirmation is required for sustained upside. Immediate resistance is located at the 9-day EMA at 147.69, followed by the critical March low pivot at 148.18. A decisive close above these resistance points would significantly improve the short-term technical outlook, effectively neutralizing recent bearish momentum and potentially triggering further bullish advances toward psychological resistance near 150.00.
Conversely, if the pair struggles to overcome near-term resistances, downside risks remain evident, with key technical support provided by the ascending trendline dating from January 2023 lows, currently positioned at 143.75. Any retreat back toward this trendline should be closely monitored, as a confirmed break would resume bearish pressure, likely accelerating declines toward deeper structural supports at 143.00 and below. Traders should also remain cautious ahead of Thursday’s crucial U.S. CPI release, as elevated overnight volatility around 16.5% signals lingering uncertainty about short-term direction.