USD/JPY dropped after failing to break resistance near 148.30. The pair shows bearish momentum as traders weigh US policy uncertainty. The Federal Reserve’s future rate path remains unclear amid mixed inflation and political developments.
Fed officials offered cautious signals last week. Minneapolis Fed President Neel Kashkari still expects two rate cuts this year. However, Fed Chair Powell warned that tariffs could create lasting inflation, requiring careful policy consideration.
On the other hand, geopolitical risks also weigh on the US Dollar. A US intelligence report showed strikes on Iranian nuclear sites only delayed progress by months. Iran’s refusal to resume nuclear talks adds to uncertainty, capping USD/JPY gains despite a weaker yen backdrop.
Moreover, political developments in Washington add another layer of risk. President Trump’s comments about replacing Powell raise concerns about the Fed’s future independence. Market participants remain cautious ahead of key events and data.
USD/JPY continues to consolidate above 142. A break below this level could signal further downside. However, any shift in the Fed’s outlook or a geopolitical flare-up could quickly reverse the trend. Traders await clarity from upcoming US manufacturing data and central bank commentary.
USD/JPY Technical Analysis – Descending Broadening Wedge
The 4-hour chart for USD/JPY shows the formation of a descending broadening wedge pattern, with the price failing to break above 148.30. This failure has led to continued bearish momentum in the pair. Strong bearish pressure in the US Dollar Index is contributing to the negative trend in the USD/JPY exchange rate. A break below 142 would signal further downside.
