Yen correction extends amid mixed signals

The USD/JPY pair is being influenced by conflicting forces. The US dollar finds support from expectations that the Federal Reserve will maintain its hawkish hold on interest rates, coupled with diminished demand for traditional safe-haven assets.

Conversely, the market remains cautious of potential currency intervention by the Bank of Japan as the exchange rate nears the critical 152.00–152.50 range. This threat is effectively capping the dollar's upside potential.

Amid a backdrop of neutral US macroeconomic data and a decline in 10-year Treasury yields, selling pressure on the pair is gradually mounting.

Technical analysis: USD/JPY

H4 Chart:

A downward wave structure is unfolding towards the 151.49 level. Upon reaching this target, we anticipate the formation of a tight consolidation range. A subsequent downward breakout would signal potential for a further decline to 150.40, with the broader downtrend potentially extending to 149.75. This bearish scenario is technically confirmed by the MACD indicator, whose signal line is above zero but is turning sharply downward from its highs.

H1 Chart:

The pair completed a downward impulse to 151.14, followed by a correction to 152.59. A new downward impulse is now taking shape, targeting 151.48. A breakout below this level would open the path for the wave to extend towards 150.40. This outlook is corroborated by the Stochastic oscillator, with its signal line below 50 and pointing firmly downward towards 20.

Conclusion

The yen's correction is progressing as the dollar's momentum wanes. While broader monetary policy divergence offers underlying support to USD/JPY, the immediate risks are tilted to the downside, with technical structure and intervention fears suggesting a test of lower support levels is likely.