USD/JPY continues to be a center of the trader world, especially following strong economic data and continued geopolitical news. As the pair goes up and down, it is under tight scrutiny because of what it means for U.S. international trade and investment plans. The new Nonfarm Payrolls (NFP) report has come out with robust growth in the employment numbers. Consequently, market participants are focused on identifying new resistance and support levels for USD/JPY.
In the most recent NFP release, the employment indicator jumped to 49. This was above the market’s expectation of 48.8 and a 0.3 increase from May’s 48.5. The bullishness in employment figures might keep a lid on USD/JPY just below the 200-period Simple Moving Average (SMA). This moving average is right around the 144.35 area on the 4-hour chart right now. The 200-period SMA usually acts as a very important indicator for traders, giving them clues about where the price is headed in the near future.
Today’s short-term technical analysis shows USD/JPY has formed a support zone around 143.40-143.35. The big round number of 143.00 offers a lot of support for the pair. On top of that, the overnight swing low around 142.70-142.65 area bolsters this support with increased gravitas. If these levels don’t hold, analysts are sounding the alarm that USD/JPY could plummet. If so, it might be bound for the May monthly swing low near 142.15-142.10.
The currency pair faces resistance at the psychological level of 144.00. If USD/JPY continues rising towards this level, it may present a good shorting opportunity for bears looking for a trend reversal. A horizontal hurdle located at 144.65. Should USD/JPY manage to go through this hurdle, it may well return to the received wisdom level of 145.00.
Beyond technical considerations, geopolitical factors are becoming increasingly important for shaping USD/JPY flows. Recent remarks by US President Donald Trump hinting at even higher tariffs on Japanese goods have investors’ fears raised to a fever pitch. His comments on US-Japanese trade negotiations have the potential to move the currency pair strongly. Whenever there is uncertainty over trade relations, exchange rate volatility tends to increase.
Market sentiment affects USD/JPY movements. Generally, a positive risk tone weakens the safe-haven Japanese yen which in turn provides support to the USD/JPY pair. Investors are clearly on high alert. If long-held support levels do not hold, it may strengthen bearish sentiment against USD/JPY and lead to deeper declines.
The economic backdrop in Japan makes USD/JPY trading all the more treacherous. Fears of further growing inflationary pressure could push the Bank of Japan (BoJ) to bring a rate hike forward into 2025. Even the prospect of such speculation could shape investor sentiment and alter the currency pair’s path.