The USD/JPY is Deepening Its Losses – Technical Analysis (July 24, 2025)
Original Analysis by Economies.com
The USD/JPY currency pair continues to record significant losses, deepening its downward trajectory as selling pressure increases. According to technical analysis conducted on July 24, 2025, the pair broke through key support levels, leading to broader bearish moves across the market. Market sentiment has shifted into negative territory amid economic concerns, technical breakdowns, and changing expectations regarding monetary policy from both the United States and Japan.
Key Highlights:
– Continuation of the bearish trend is reinforced by the pair’s position beneath the 50-day and 200-day moving averages.
– The negative slope of key indicators, such as the MACD and RSI, further support the downside scenario.
– Currently, the USD/JPY pair is trading at multi-week lows, suggesting ongoing selling momentum and deteriorating investor confidence in the dollar versus the yen.
Technical Overview:
– The USD/JPY pair has been on a sustained downward move since failing to hold critical resistance levels earlier in the month.
– A sharp decline below the 138.50 level, a previous support zone, has paved the way for further downward pressure on the pair.
– The moving averages have confirmed this bias. The 50-day simple moving average (SMA) has crossed below the 200-day SMA, generating a traditional bearish “death cross” signal.
– The Relative Strength Index (RSI) continues to trend lower, currently hovering near the 30 level. This zone is commonly viewed as oversold but, in trending markets, such dips can indicate deeper bearish strength instead of signaling immediate reversal potential.
– The Momentum oscillator suggests that directional bias remains in favor of the bears, with little evidence of immediate recovery.
– The MACD (Moving Average Convergence Divergence) has also moved deeper into negative territory, with its histogram widening to the downside. This reflects increasing bearish momentum.
Chart Pattern Observations:
– The pair has broken down from a descending triangle pattern that had been forming over the past several weeks. This pattern typically signals continued selling pressure should it break to the downside, which is what has occurred.
– Price action indicates lower highs and lower lows, aligning with the textbook definition of a bearish market structure.
Bearish Targets and Next Support Levels:
Following the technical breakdown, next support levels are being evaluated for their potential to provide some near-term stabilization. These include:
• 137.40: This was an intraday support zone tested during late June 2025, offering slight buying interest historically.
• 136.80: A psychological round number and previous support from May 2025. It may attract bids from short-term technical traders.
• 136.10: This level marks a key retracement point based on Fibonacci analysis drawn from the previous major swing low in April 2025.
• 135.50: A more significant structural level and a potential turning point if the market continues its descent.
These levels should be monitored as potential points for short-covering or bounces, though momentum currently favors a continuation of the downtrend.
Fundamental Factors Driving the Decline:
Beyond the charts, there are macroeconomic and policy-driven reasons behind the weakening of the USD against the Japanese yen. These include:
• Shift in U.S. Federal Reserve Outlook: The market has begun pricing in the possibility that the Fed may hold off on further policy tightening due to softer-than-expected economic data in the United States. This perception has led to a decline in U.S. Treasury yields, removing one of the main attractions for holding the dollar.
• Japanese Yen Strength Due to Risk Aversion: As global markets experience elevated volatility, the yen has regained its status as a safe-haven currency. This has particularly been the case amid uncertainty over economic performance in Western economies, as well as growing geopolitical tensions in East Asia.
• Inflation Expectations: While the U
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