Title: USD/JPY Continues to Decline: An In-depth Technical Analysis
Original Article by: Economies.com (Published July 24, 2025)
Rewritten and Expanded for Clarity and Depth
Overview:
The USD/JPY pair has been under considerable bearish pressure, showing continued losses as of July 24, 2025. Most recent trading sessions reflect an increasing bearish trend influenced by a variety of technical and fundamental factors. This comprehensive analysis synthesizes the key elements driving the decline in the USD/JPY exchange rate, taking an updated view of the price action, indicators, and market expectations over the short and medium term.
Current Technical Development:
– Price Movement:
The USD/JPY currency pair has extended its retracement, confirming support breakouts and signaling that bearish momentum is gaining strength. It dipped further below previously established key support levels, particularly the 139.00 mark, which had held as a notable pivot over recent sessions. The break below this critical level has activated additional bearish forecasts into action.
– Confirmed Bearish Signals:
The pair is trading consistently below both the 50-day and 100-day moving averages, reinforcing the ongoing downside trend.
– These moving averages are now acting as dynamic resistance zones rather than support.
– The trade patterns now strongly favor more downside movements.
– The consistent formation of lower highs and lower lows confirms an established and strengthening downtrend.
– Candlestick Patterns:
Recent daily candlestick formations further affirm the shift in market sentiment.
– Multiple bearish engulfing patterns observed on H4 and daily charts
– Long upper wicks from recent sessions indicate selling pressures whenever prices attempt to rebound
– Lack of bullish follow-through on any intraday rallies adds to the bearish conviction
Indicators and Oscillators:
– Relative Strength Index (RSI):
The RSI on the daily chart lies below the neutral 50 level and is trending downward, currently positioned near 38.
– This indicates strengthening bearish momentum with no immediate signs of reversal
– The RSI remains far from the oversold zone, which supports the idea that more room exists for additional downside movement
– MACD (Moving Average Convergence Divergence):
The MACD line lies firmly below the signal line and below the zero axis
– Momentum has shifted clearly in favor of the bears
– Histogram bars are growing on the negative side, emphasizing bearish acceleration
– Stochastic Oscillator:
The stochastic oscillator is also on a downward course
– No crossover indicating bullish divergence has appeared
– This metric supports near-term continuation of bearish momentum
Fundamental Backdrop Supporting the Decline:
– US Interest Rate Expectations:
With growing signs of stagnation in consumer spending and labor market sluggishness, expectations for future Fed rate hikes have diminished significantly.
– The Federal Reserve recently indicated a probable pause in monetary policy tightening
– Weak US inflation data has strengthened arguments for dovish shifts
– This reduces the USD’s yield advantage relative to the JPY
– Japanese Monetary Policy:
While historically dovish, the Bank of Japan has started showing signs of adjusting its ultra-loose policy stance.
– Recent BOJ meeting minutes hinted at a gradual movement toward rate normalization
– Speculation around raising short-term rates later this year is building
– Rising Japanese bond yields may begin to attract capital inflows into JPY
– Risk Appetite and Carry Trade Unwind:
Investor sentiment toward risk-aversion has tilted upward due to geopolitical tensions in East Asia and reports of slower global growth.
– These concerns typically trigger safe-haven demand in favor of the Yen
– As EUR, GBP, and AUD carry trade positions unwind, JPY benefits from repatriation of investments
– Yield Differential Shrinks:
A contraction in US-Japan government bond yield spreads significantly contributes to downside pressure on USD/
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