Title: USD/JPY Resumes Bearish Momentum: Technical Analysis Overview
Source: Adapted from Economies.com analysis published on February 10, 2025
Original Author: Economies.com
Overview
The USD/JPY currency pair has once again entered a bearish phase, continuing its downward trajectory after a brief attempt to recover over the past few sessions. The current technical outlook highlights increased downside pressure on the pair, pushing it closer to important support levels. As the bearish trend regains momentum, market participants are watching closely for price action near key technical indicators and Fibonacci retracement thresholds.
Current Market Context
– On February 10, 2025, the USD/JPY pair resumed a notable downward trend after failing to maintain a short-term rebound attempt.
– The pair dropped below the support level of 146.50, a key psychological and technical area that previously held up against selling pressure.
– This decline confirms the ongoing control of bearish sentiment in the market and suggests the likelihood of further downside in the short term.
Technical Indicators Supporting Bearish Outlook
Technical analysis confirms that key indicators are aligning with the recent bearish price action:
– The price has settled below the 50-day Exponential Moving Average (EMA), which acts as dynamic resistance during downtrends. Sustained trading below this indicator often suggests continuation of weakness.
– Momentum oscillators such as the Relative Strength Index (RSI) have shifted below the neutral 50 level, currently hovering in the range of 40–45. This indicates growing bearish momentum without entirely entering oversold territory.
– The MACD indicator maintains a negative signal, with the MACD line below the signal line and the histogram expanding in the negative territory.
– Candlestick formations on the four-hour and daily timeframes have shown a combination of bearish engulfing and strong rejection from resistance zones, further supporting the sell-side outlook.
Fibonacci and Support Levels to Watch
The retracement levels drawn from the late January 2025 peak to the recent swing low provide further confirmation of key zones:
– The 38.2% Fibonacci retracement level near 147.10 acted as a ceiling for the pair’s recent attempt to rally.
– Immediate support now lies around 145.40, coinciding with minor price congestion and previous reaction lows.
– A breach below 145.40 is expected to accelerate bearish movement toward the next key level at 144.20, which corresponds to the 61.8% retracement of the same move.
– A deeper selloff could potentially drag prices toward the 143.00 area, a zone that has previously served both as resistance and support multiple times in 2023.
Market Sentiment and Risk Factors
Despite data-driven fluctuations in the short term, the overall sentiment remains tilted toward yen strength due to several macroeconomic themes:
– Expectations from the Bank of Japan (BoJ) remain consistent with reduced monetary easing, signaling an eventual shift toward normalization. This supports the yen against the dollar.
– Meanwhile, persistent uncertainty about the U.S. Federal Reserve’s trajectory regarding interest rate cuts or pauses in 2025 continues to influence USD trading behavior.
– Geopolitical concerns and safe haven demand also tend to favor JPY in periods of global market volatility, particularly if risk sentiment deteriorates further.
Potential Scenarios for Traders
A clear roadmap emerges for different trading scenarios based on price action and technical behavior:
1. Bearish Continuation (Preferred Scenario)
– If USD/JPY breaks below 145.40 with volume confirmation, traders could anticipate a decline toward 144.20.
– A further break of 144.20 may test the 143.00 support zone next.
– Consider short positions with tight stops above recent highs at 146.80.
2. Rebound and Consolidation
– If the pair stabilizes above 145.40 and climbs back toward 146.50 or higher, consolidation could take place before the next directional move.
Explore this further here: USD/JPY trading.