The USD/JPY Is Searching for a Rising Low
Source: Economies.com
Original analysis published on Sept. 4, 2025
By Economies.com Analyst Team
Market Snapshot:
The USD/JPY pair exhibited a controlled pullback during recent sessions, as it retreated slightly from local highs. This development follows last week’s notable bullish impulse, which saw the pair comfortably break above its former resistance levels. The current outlook suggests the pair may be in the process of forming a new rising low—a key indicator of sustained bullish pressure in the medium term.
This article provides a thorough breakdown of the current technical and fundamental status of the USD/JPY currency pair, outlining expectations for future price direction and the indicators supporting the analysis.
Key Observations:
– The currency pair experienced a slight bearish movement, settling near 145.80 as of the latest trading session. However, the underlying structure remains bullish.
– The 50-day Exponential Moving Average (EMA) continues to provide dynamic support, floating just below the price action.
– Market sentiment remains generally optimistic about the USD/JPY, largely due to continued divergence in monetary policies between the Federal Reserve and the Bank of Japan.
– The descending wave observed during the past 24 hours is being interpreted by technical charts as a temporary correction rather than a trend reversal.
Technical Analysis:
1. Price Chart Patterns:
– The pair moved lower briefly but remains structured within an ascending channel pattern on the 4-hour and daily chart views.
– Price action suggests a possible formation of a higher low around the current zone (145.50–145.80), which, if confirmed, could lead to a new upward wave targeting previous highs.
2. Support and Resistance Levels:
– Immediate support sits at 145.50.
– Further support can be found near the 145.00 psychological level and the 50-day EMA.
– Resistance is expected near 146.80, followed by the more significant resistance zone around 147.50.
– A break above the 147.50 level would open doors to test the 148.30 area, a multi-month high.
3. Indicators and Momentum:
– The Relative Strength Index (RSI) is slightly retreating from overbought territory, currently positioned around the 60 level, which supports the prospect of a healthy consolidation.
– MACD (Moving Average Convergence Divergence) still shows positive momentum despite declining histogram bars, indicating that bullish energy may simply be cooling off temporarily.
– The Average True Range (ATR) suggests mild to moderate volatility, allowing for manageable risk in short-to-medium-term trades.
4. Candlestick Analysis:
– Recent candles are long-shadowed on the downside, indicating that buyers are entering on dips.
– No reversal patterns have materialized, which supports the prevailing bullish continuation hypothesis.
Fundamental Backdrop:
Several core macroeconomic factors are contributing to the bullish bias on USD/JPY.
1. Divergence in Central Bank Policies:
– The Federal Reserve maintains a relatively hawkish tone, with officials focused on further measures to fight sticky inflation. While a rate hike isn’t imminent, the Fed’s stance reinforces the dollar’s strength.
– In contrast, the Bank of Japan (BoJ) continues its ultra-loose monetary stance. Despite rising inflationary pressures in Japan, policymakers stress the importance of wage growth before tightening any key levers.
– This divergence favors continued strengthening of the US dollar against the Japanese yen.
2. US Economic Indicators:
– Recent data from the US indicated moderate strength in manufacturing and services. Consumer sentiment remains elevated, bolstering confidence in near-term economic momentum.
– Job creation remains stable, and inflation readings, although softened, remain above the Fed’s comfort zone, supporting arguments for keeping interest rates elevated.
3. Japanese Economic Struggles:
– Japan’s GDP growth has slowed significantly in recent quarters, with exports struggling amid global economic uncertainty
Explore this further here: USD/JPY trading.