USDJPY remains under pressure, continuing a broader downtrend that began in early January. While the pair recently bounced from April's lows, technical signals still point to persistent bearish momentum. Traders are closely watching upcoming economic releases that could shape short-term sentiment, but the prevailing market structure suggests downside risks remain in play.
Overview
USDJPY remains under pressure, continuing a broader downtrend that began in early January. While the pair recently bounced from April's lows, technical signals still point to persistent bearish momentum. Traders are closely watching upcoming economic releases that could shape short-term sentiment, but the prevailing market structure suggests downside risks remain in play.
Key Economic Events
Monday 17:00 (GMT+3) – USA: ISM Manufacturing PMI (USD)
Tuesday 09:30 am (GMT+3) – Switzerland: CPI m/m (CHF)
Tuesday 17:00 (GMT+3) – USA: JOLTS Job Openings (USD)
Wednesday 04:30 am (GMT+3) – Australia: GDP q/q (AUD)
Wednesday 15:15 (GMT+3) – USA: ADP Nonfarm Employment Change (USD)
Wednesday 16:45 (GMT+3) – Canada: Overnight Rate (CAD)
Wednesday 17:30 (GMT+3) – USA: ISM Services PMI (USD)
Thursday 15:15 (GMT+3) – Europe: Main Refinancing Rate (EUR)
Thursday 15:30 (GMT+3) USA: Unemployment Claims (USD)
Friday 15:30 (GMT+3) – Canada: Employment Change (CAD)
Friday 15:30 (GMT+3) – USD: Nonfarm Employment Change (USD)
Technical Analysis
Since January 10, USDJPY has maintained a clear downward trajectory, shaped by a confluence of technical and fundamental drivers. Although the pair staged a modest rebound from April's low of 139.880, it remains structurally capped beneath both the 20- and 50-period EMAs—underscoring continued bearish control. Technical indicators also reinforce the negative bias: the Momentum Oscillator remains below the 100 line, pointing to persistent selling pressure, while the RSI holds below the neutral 50 mark, suggesting prevailing downside momentum. A clean break below the key support level at 142.107 would likely confirm bearish continuation and open the door to deeper retracements.
Potential Upside Targets
If the bulls take control of the market, traders may consider the following four potential upside targets:
144.143: The first resistance is established at 144.143, corresponding to the weekly Pivot Point, PP, estimated using the standard methodology.
146.280: The second price target is identified at 146.280, representing the peak from May 29.
148.643: The third price target level is established at 148.643, corresponding to the daily high marked on May 12.
151.205: An additional price objective is recognized at 151.205, aligning with the high point formed on March 28.
Potential Downside Targets
If the bears maintain control of the market, traders may find potential opportunities in the following four downside targets:
142.107: The initial level of support is seen at 142.107, corresponding to the trough marked May 27.
139.880: The second level of support is identified at 139.880, which corresponds to the low point from April 22.
137.834: The third level of support is established at 137.834, representing the weekly support, S3, calculated using the standard Pivot Points methodology.
135.355: An additional support is observed at 135.355, corresponding to the 261.8% Fibonacci Extension drawn from 142.107 to 146.280.
Fundamentals
Japan's manufacturing sector contracted for an 11th straight month in May, though at the slowest pace in five months, as new order declines eased. The final au Jibun Bank PMI rose to 49.4 from April's 48.7, signaling a move closer to stabilization. Output and new orders remained weak, partly due to US tariff concerns, but employment rose and input costs eased. Business confidence improved, especially in semiconductors, though lingering worries over trade tensions, inflation, and demographic challenges continue to weigh on the outlook.
On the other hand, in the US, personal income and disposable income each rose 0.8% in April, boosted by government benefits and wages. However, consumer spending increased just 0.2% as gains in services were offset by weaker goods demand. The saving rate climbed to 4.9%, while inflation remained steady, with the core PCE index up 2.5% year-over-year.
Conclusion
While USDJPY has shown signs of short-term recovery, the broader technical and fundamental backdrop continues to favor the downside. With key support levels in focus and a busy economic calendar ahead, traders should remain cautious and watch for confirmation signals before positioning for either continuation or reversal. The overall bias remains bearish unless a sustained move above key resistance shifts the market structure.