Title: USD/JPY Exhausts Bullish Momentum and Faces Bearish Pressure – Analysis August 13, 2025
Source: Economies.com
Original Author: Economies.com Analysis Team
Overview
On August 13, 2025, the USD/JPY currency pair revealed signs of waning bullish momentum after experiencing a series of upward movements. The earlier bullish attempts seem to be running out of steam, setting the stage for a potential reversal or correction in the near term.
The pair encountered technical resistance that limited further gains and signaled that buyers are losing control. Subsequently, traders are now turning their attention to key support zones and technical indicators that may provide new insights into the direction of the pair.
Technical Analysis Summary
The USD/JPY pair’s trajectory over the past weeks showcased strong bullish behavior, spurred by economic data, monetary policy expectations, and strong demand for the US dollar. However, recent price action, candlestick patterns, and momentum oscillators suggest that the upward force has been exhausted, opening the door for a corrective pullback or downside continuation. Here is a deeper breakdown:
1. Price Rejection at Resistance Levels
– The USD/JPY pair approached the region near the 146.50 mark, a known resistance zone that had previously led to reversals.
– Price action in the area produced long upper wicks on candlesticks, suggesting sellers stepped in to limit further gains.
– The inability to break and hold above this level shows that buying pressure was insufficient at higher price levels.
2. Bearish Technical Indicators
– The Relative Strength Index (RSI) moved away from overbought territory, beginning to slope downward. This often signals weakening bullish momentum.
– The Moving Average Convergence Divergence (MACD) histogram showed decreasing bullish bars, indicating loss of upward momentum.
– Stochastic oscillators produced a bearish crossover in overbought conditions, reinforcing expectations of a downside move.
3. Formation of a Bearish Pattern
– The rejection from the 146.50 resistance level formed the right shoulder of a potential Head and Shoulders pattern on the four-hour chart.
– The neckline of this formation is currently positioned around the 144.80 region, acting as short-term support.
– A decisive break below the neckline could activate the pattern’s bearish implications, potentially driving the pair lower toward 143.00 and then 141.70 zones.
Factors Contributing to Reversal Expectations
Several fundamental and technical factors contribute to the belief that the USD/JPY pair may be poised for a decline:
– Divergence Between US Dollar Strength and Yen Weakness: While the US dollar has been supported by hawkish comments from Federal Reserve officials, the Japanese yen has remained under selling pressure due to loose monetary policy. However, recent adjustments and speculation surrounding Bank of Japan’s future stance add unpredictability.
– Market Overreaction: Traders may have priced in too much optimism regarding the dollar, leading to an overextended rally.
– Global Risk Sentiment: As equities show signs of volatility, demand for safe-haven assets like the Japanese yen could increase, putting downside pressure on this currency pair.
Key Support and Resistance Levels to Monitor
Traders are closely watching several technical levels that could determine the pair’s short-term and medium-term outlook:
Resistance Levels:
– 146.50: Key horizontal resistance where price recently stalled.
– 147.30: A potential follow-through level if bullish momentum regains strength.
– 148.60: A longer-term resistance that held firm in May and June 2025.
Support Levels:
– 144.80: Immediate support and neckline of the Head and Shoulders pattern.
– 143.00: Former resistance turned support, potentially tested on a breakdown.
– 141.70: Next significant level in case the pair breaks below 143.00.
Market Scenarios Ahead
To evaluate where the USD/JPY may head next, traders consider two potential cases:
Bullish Scenario
– If
Explore this further here: USD/JPY trading.