USD/JPY is showing signs of weakness after failing to hold gains above 148.30. The pair faced strong resistance as market sentiment shifted following Powell’s testimony and easing global tensions.
The breakout from the descending broadening wedge failed to sustain. Traders saw this as a signal of weakening bullish momentum in USD/JPY. The pair is now hovering near key support levels.
The Fed’s dovish tilt has capped the strength of the US dollar. Markets now fully price in a rate cut by September. This outlook has weakened the dollar’s appeal, especially against currencies backed by hawkish central banks.
Japan’s economic data has been mixed, but the yen gained as safe-haven demand eased. The ceasefire between Iran and Israel reduced risk premiums, prompting investors to return to low-yield currencies like the yen.
US Treasury yields also declined after Powell’s remarks. Lower yields reduce interest rate differentials, making the USD less attractive compared to the JPY.
If USD/JPY breaks below 142, the bearish trend could accelerate. Technical indicators also show rising downside pressure in the pair. In the short term, USD/JPY may remain range-bound. But continued US data weakness or further dovish Fed signals could trigger a sharp decline.
The 4-hour chart for USD/JPY shows that the pair has found strong resistance at 148.30. The breakout from the descending broadening wedge pattern failed near this level, indicating that bearish pressure is likely to persist. A break below 142 could initiate the next downward trend in the USD/JPY. The strong bearish momentum suggests a possible downside breakout in the pair.
