USD/JPY rose on Thursday and tested the 20-day Simple Moving Average (SMA) at 159.19, then pulled back as risk appetite improved. At the time of writing, it traded at 158.99, up 0.28%.
The chart shows a quasi head-and-shoulders pattern, with lower highs and lower lows after a yearly peak of 161.46. This points to building downside pressure in the short term.
Technical Momentum Signals
The Relative Strength Index (RSI) is moving down towards the 50 level. This supports the view that selling momentum is increasing.
A break below the April 9 daily low of 158.48 would open the way to 157.88, the April 8 swing low. Below that, support levels sit at the 50-day SMA of 157.35 and the 100-day SMA of 156.85.
If the pair moves above 159.19, it may face selling pressure near 160.00. The report notes this area is watched for possible action by Japanese authorities.
The USD/JPY chart is showing a head-and-shoulders pattern, which points to more downside potential in the coming weeks. We are seeing lower highs and lower lows form after the pair recently peaked. This suggests that sellers are starting to gain control of the market.
Key Levels And Strategy
This technical weakness is supported by recent economic data, as the latest US inflation report for March 2026 came in softer than expected. This has caused US bond yields to fall, reducing the dollar’s appeal. The interest rate spread between the US and Japan has now tightened by over 20 basis points in the last month, adding further pressure on the pair.
For traders, the key level to watch is the 158.48 support mark. A decisive break below this price would confirm the bearish pattern, signaling a good time to consider buying put options or initiating other short positions. The initial targets for such a move would be around the 157.88 and 157.35 levels.
On the other hand, if the pair rallies, resistance is expected near the 20-day average at 159.19 and especially around the 160.00 mark. We remember the suspected interventions by Japanese authorities back in 2024 when the price pushed these levels. This history makes selling out-of-the-money call options or using bear call spreads an interesting strategy to take advantage of this capped upside.
