USD/JPY outlook: Falls to seven-week low as strong Japanese wage growth boosts bets for BoJ rate hike

Slobodan Drvenica Windsor Brokers

USD/JPY

USDJPY fell nearly 0.9% in Asian – early European trading on Wednesday as the dollar remains at the back foot for the third straight day, while yen received fresh boost from stronger than expected rise of earnings in Japan that adds to scenario of more BoJ rate hikes.

Today’s drop below temporary base / 50% retracement of 148.64/158.87 (153.76) and base of thickening daily cloud (153.36) generated fresh signals of continuation of short-term downtrend from 158.87 (2025 peak, posted on Jan 10).

Bears cracked 200DMA (152.77) which marks the upper boundary of 152.77/41 support zone, consisting of 200DMA / Fibo 61.8% / 100DMA.

Firm break here is needed to validate reversal signal and open way for deeper correction of Sep/Jan 139.57/158.87 rally and expose targets at 151.50 (Fibo 38.2% of 139.57/158.87) and 151.00 (round figure).

Caution on potential headwinds bears may face at this zone, with limited upticks to offer better selling opportunities as daily studies are in predominantly bearish configuration.

Releases of US ADP private sector payrolls report, Dec trade balance and January Services PMI will be closely watched today.

Res: 153.36; 153.76; 154.49; 154.70.
Sup: 152.55; 152.36; 152.00; 151.50.

Interested in USD/JPY technicals? Check out the key levels

1. R3 156.49
2. R2 156.01
3. R1 155.14
PP 154.65
1. S1 153.78
2. S2 153.3
3. S3 152.43

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD puts 0.7000 to the test on solid Dollar

In line with the rest of its risk-linked peers, AUD/USD retreats markedly and challenges the key 0.7000 support ahead of the opening bell in Asia. The robust performance of the Greenback hurt the sentiment around the Aussie Dollar, dragging spot lower following the FOMC event.

Gold extends intraday slide towards $4,250

Gold turned negative by the end of Wednesday and trades in the $4,260 price zone. The US Federal Reserve left rates unchanged, but delivered a hawkish message, even though Chair Kevin Warsh refused to provide forward guidance.

Two altcoins to watch as DeFi market cap nears $70B

Decentralized Finance (DeFi) tokens exhibit mixed signals on Wednesday, with Uniswap (UNI) slightly pulling back from an early-week rally to highs around $3.73, while Aster (ASTER) extends its recovery near $0.80. Bitcoin (BTC) holds above $65,000 following a rejection at June highs around $67,000.

The next big AI trade may not be about chips or software

Artificial intelligence has already created some of the biggest winners in modern market history. Chipmakers have surged, data centre construction is booming, and electricity demand forecasts are changing globally.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.