USD/JPY Rebound May Fade as Bearish Pressure Returns
USD/JPY has rebounded from the key long-term support at 140 but remains under pressure amid global uncertainty. Broader concerns about the US economy and the Federal Reserve’s policy outlook continue to fuel volatility in the pair. The Beige Book and recent PMI data point to economic softening, which limits the potential for sustained US Dollar strength.
Moreover, President Trump’s latest tariff comments have added to market uncertainty. He stated that the US would decide on tariff rates for China within the next two to three weeks while emphasising that China would not trade with the US under the current 145% tariff rate. In addition, Fed Governor Adriana Kugler warned that elevated tariffs could fuel inflation. These mixed signals have complicated the outlook for USD/JPY. If the US Dollar faces renewed selling pressure, the pair could break below 140, potentially triggering a deeper decline.
USD/JPY Technical Analysis – Descending Broadening Wedge
The 4-hour chart for USD/JPY shows that the pair failed to break below the long-term pivotal level at 140. This level also coincides with the support of a descending broadening wedge pattern. Upon testing 140, the RSI indicated strong oversold conditions, suggesting the rebound may have been driven by technical correction. If the pair fails to break above 144, it may continue to move lower. A break below 140 would likely trigger a sharp decline, as this is a significant long-term support level.
