USD/JPY has snapped a days-long uptrend and is rapidly approaching a key support zone.
Will there be enough buyers at the level to maintain the pair’s even longer-term uptrend?
The daily chart might give us clues:
USD/JPY Daily Forex Chart by TradingView
The U.S. dollar has been taking hits against its counterparts after this week’s U.S. CPI and PPI reports stoked expectations for multiple rate cuts from the Fed.
Meanwhile, over in Japan, officials have been dropping hints about a potential rate hike as soon as next week.
USD/JPY, which had been climbing steadily since December, not only tumbled from the 158.00 area but also broke out of a days-long ascending channel on the daily chart.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
How low can USD/JPY go before the buyers step in again?
The 154.50 zone is one to watch, as it lines up with the height of the channel USD/JPY just broke. It also sits near the Pivot Point at 154.68 and the 38.2% Fibonacci retracement of December’s rally.
Adding to the mix, a trend line just below this area—stretching back to September 2024—might make bears think twice about pushing prices lower.
If we see green candlesticks and sustained trading above 155.50, USD/JPY could resume its uptrend, potentially revisiting the 158.00 highs or even reaching new 2025 peaks.
But if bearish momentum continues, the pair might slip below the daily trend line support. Without solid demand near the 61.8% Fib and the 200 SMA, the dollar could head toward the 152.00 area in the coming days.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
