USD/JPY on pause: Yen slows after sharp rally

USD/JPY settled at 154.29 on Tuesday, with the yen pausing its rally after a notable surge of nearly 3.2% in the previous two sessions. This move was driven by growing concerns about a possible coordinated currency intervention between Japan and the US.

The market was boosted by news that the Federal Reserve Bank of New York had requested USD/JPY levels from dealers on Friday. At the same time, Japanese officials confirmed that they were in close communication with the US on currency policy and potential market actions.

However, Bank of Japan (BoJ) data suggested that the sharp yen appreciation on Friday was unlikely to be due to direct intervention. This speculation intensified the market’s reaction and speculative positioning.

The yen continued to receive support from the broader weakness of the US dollar, driven by rising geopolitical risks and trade uncertainties, as well as expectations that US President Donald Trump might replace Fed Chairman Jerome Powell with a softer candidate, further pressuring the US currency.

Technical analysis

On the H4 chart, USD/JPY has formed a correction wave following the previous decline. A continuation of the growth wave to the 155.00 level is possible today. After this rise, a rebound from the resistance level is expected, with the first target for a further decline at 153.00, followed by 152.00. This scenario is confirmed by the MACD indicator, as the histogram is below zero and rising, with the signal line likely to cross the histogram and turn upwards soon.

On the H1 chart, USD/JPY is testing the 153.80 mark and forming a growth wave. If the price tests the 155.00 level and rebounds, further declines could be expected, with the first support at 153.00 USD. The Stochastic oscillator supports this, as its signal lines continue to decline towards the 50.0 level. A break of this level would signal a continuation of the downward trend.

Conclusion

USD/JPY has paused its rapid ascent amid speculation of potential currency intervention. Despite a weaker US dollar and geopolitical risks, the yen’s recent strength is being tested. Technically, while the immediate outlook points to a possible short-term rise to 155.00, a rebound and subsequent decline towards 153.00 could be on the horizon, depending on how market sentiment evolves.