FX.co ★ USD/JPY

The USD/JPY pair has eased back below the mid-152.00s during the Asian session on Tuesday, extending its corrective move after failing to sustain gains above the 152.35 resistance region. The Japanese Yen (JPY) saw renewed demand following verbal intervention from Japanese officials, who reiterated their readiness to respond to excessive currency volatility While the remarks lacked concrete action, they effectively curbed speculative long positions in the Dollar, triggering modest profit-taking among recent buyers.However, despite this latest dip, the broader technical and macroeconomic backdrop continues to favor the US Dollar’s resilience over the medium term. Domestic political uncertainty in Japan and the lack of a clear path toward monetary policy normalization by the Bank of Japan (BoJ) remain key factors undermining the Yen’s safe-haven appeal. Traders continue to question whether the BoJ can feasibly raise rates in the near term given subdued wage growth, fragile business confidence, and a still-muted inflation outlook.Globally, the macro environment is tilting toward a softer US Dollar bias in Q4, with markets increasingly pricing in two additional rate cuts by the Federal Reserve (Fed) before year-end. However, persistent geopolitical risks, concerns about a potential US government shutdown, and a cautious risk tone across equity markets are lending the Greenback periodic safe-haven support. These conflicting dynamics create a range-bound bias for USD/JPY in the near term, with neither bulls nor bears showing strong conviction. Adding to the uncertainty is the divergence in monetary policy expectations: while the Fed appears poised to ease further, the BoJ is still battling to exit ultra-accommodative conditions. This policy gap, though slightly narrowing, remains wide enough to keep the interest rate differential in favor of the USD a structural driver supporting the pair above 150.00.From a technical perspective, USD/JPY remains in a medium-term uptrend, though short-term momentum indicators are signaling fatigue. On the 4-hour chart, the Relative Strength Index (RSI) remains above the 50 mark, reflecting a still-positive bias, yet its downward slope suggests waning bullish momentum. The Moving Average Convergence Divergence (MACD) histogram has flattened near the zero line, further hinting at potential consolidation before the next decisive move. The immediate resistance lies at 152.35, which has repeatedly capped the pair’s upside attempts over recent sessions. A confirmed break and close above this level on the 4-hour timeframe would likely attract fresh buying pressure, exposing the October 9 highs near 153.20. Beyond that, bulls could target the 127.2% Fibonacci extension of the recent downswing (151.10–153.20) at 153.85 a level coinciding with the upper boundary of a rising channel visible on the daily chart.On the downside, initial support emerges at 151.70, marking the day’s intraday low. A sustained move below this threshold could invite further bearish momentum toward Friday’s low near 151.10, followed by the October 7 swing low around 150.30 which also aligns with the A–B=C–D correction projection, suggesting a potential exhaustion zone for short sellers.The Fibonacci retracement levels of the latest upswing between 150.30 and 153.20 provide additional confluence zones: the 38.2% retracement lies around 151.45, while the 61.8% level coincides with 150.85 both representing potential re-entry areas for long positions if the pair stabilizes above them. Candlestick analysis on the 4-hour and daily charts reveals indecision following the recent rally. Monday’s Doji formation indicates hesitation among traders near multi-decade highs, while Tuesday’s early bearish engulfing setup suggests the potential for a near-term pullback. Still, as long as the pair holds above the psychological 150.00 handle, the broader trend remains intact.Market sentiment continues to oscillate between expectations of Japanese intervention and skepticism about its sustainability. History shows that verbal interventions tend to produce only short-lived impacts unless supported by coordinated market actions or a shift in fundamental dynamics. As such, while JPY may gain temporary strength, sustained appreciation is unlikely without a structural policy change by the BoJ.For traders, the risk-to-reward profile currently favors cautious engagement. A tactical buy-on-dips strategy remains viable above 151.00, targeting 152.80–153.20 with a stop below 150.60 offering a risk/reward ratio of approximately 1:2.5. Conversely, aggressive bears could consider short positions on failed attempts above 152.35, aiming for 151.10 with stops above 152.80, maintaining a similar ratio.Given the thin trading conditions due to the bank holidays in Japan and the US, volatility may remain subdued. However, traders should watch for renewed momentum once liquidity returns to the market later in the week, particularly ahead of upcoming US inflation data and BoJ Governor Ueda’s comments, both of which could dictate the next directional impulse.