Markets are on edge heading into Friday's key economic releases, with Canada's Employment Change and the U.S. Non-Farm Payrolls both due at 15:30 (GMT+3). These data points come at a critical juncture, as global sentiment remains fragile following President Trump's sweeping import tariffs, which have triggered sharp risk aversion and a flight to traditional safe havens like the yen and Swiss franc. Against this backdrop, the USDJPY pair has come under intensified bearish pressure, both fundamentally and technically, as concerns over U.S. economic resilience and a potential crisis of confidence in the dollar weigh heavily on investor positioning.
Overview
Markets are on edge heading into Friday's key economic releases, with Canada's Employment Change and the U.S. Non-Farm Payrolls both due at 15:30 (GMT+3). These data points come at a critical juncture, as global sentiment remains fragile following President Trump's sweeping import tariffs, which have triggered sharp risk aversion and a flight to traditional safe havens like the yen and Swiss franc. Against this backdrop, the USDJPY pair has come under intensified bearish pressure, both fundamentally and technically, as concerns over U.S. economic resilience and a potential crisis of confidence in the dollar weigh heavily on investor positioning.
Key Economic Events
Friday 15:30 (GMT+3) - Canada: Employment Change (CAD)
Friday 15:30 (GMT+3) - USA: Non-Farm Employment Change (USD)
Technical Analysis
Since posting a cycle high of 158.864 on January 10, the USDJPY pair has entered a well-defined downtrend, declining over 8.5% from peak to trough. The formation of successively lower highs and lower lows highlights a structurally bearish market profile consistent with a sustained downside momentum.
The initial trend reversal was confirmed by a failure swing, as the secondary peak at 156.744 failed to exceed the prior high, followed by a decisive break below support at 154.769—signaling a shift in market structure and marking the transition from an uptrend to a bearish phase.
Bearish sentiment has since been reinforced by the emergence of a "Death Cross" pattern, with the 20-period Exponential Moving Average (EMA) crossing below the 50-period EMA—often viewed as a signal of deteriorating market confidence and potential for deeper declines.
Momentum indicators remain aligned with the negative bias. The Momentum Oscillator has slipped below the 100 level, indicating increased selling pressure, while the Relative Strength Index (RSI) remains firmly below the neutral 50 threshold, confirming the persistence of bearish momentum.
However, the emergence of a positive divergence between the Momentum Oscillator and price action suggests the potential for a near-term corrective rebound, warranting close monitoring for signs of a shift in momentum.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
148.556: The initial resistance is 148.556, which represents the trough marked February 25.
151.205: The second price target is identified at 151.205, corresponding to the high point from March 28.
152.794: The third target is established at 152.794, aligning with the weekly resistance, R3, estimated using the standard Pivot Points methodology.
154.364: An additional price target is estimated at 154.364, corresponding to the 61.8% Fibonacci Retracement drawn from 158.864 to 145.172.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
143.647: The first level of support is determined at 143.647, representing the 161.8% Fibonacci Extension drawn from the low point, 146.534 to the high point, 151.205.
142.453: The second support level is identified at 142.453, reflecting the monthly support, S3, estimated using the standard Pivot Points methodology.
139.571: The third support level is seen at 139.571.
138.976: An additional downward target is observed at 138.976, corresponding to the 261.8% Fibonacci Extension drawn from the low point, 146.534, to the high point, 151.205.
Fundamentals
The euro and Japanese yen surged against the U.S. dollar on Thursday as markets reacted to President Trump's sweeping tariffs on all imports, sparking fears of a global economic slowdown. Investors fled to safe-haven currencies like the yen and Swiss franc, sending the dollar to six-month lows. The euro posted its biggest intraday gain since 2015, while the yen and franc hit multi-month highs. Despite weaker U.S. services data, traders focused on the broader implications of a potential trade war. Deutsche Bank warned of a crisis of confidence in the dollar as global capital flows begin to shift.
Conclusion
With markets rattled by the far-reaching implications of President Trump's tariff policies, Friday's labor market data from the US and Canada will be closely watched for further clues on economic resilience and central bank direction. The USDJPY pair remains under firm bearish pressure, weighed down by both technical weakness and shifting investor sentiment amid a broader flight to safety. Unless there is a meaningful upside surprise in the upcoming data or a policy pivot from the Fed, the path of least resistance for the dollar appears to remain to the downside in the near term.