The Japanese yen gained 1.3% against the dollar in response to political news and economic data

USD/JPY surged to a three-week high of 146.49 on Friday before dropping sharply by over three figures, driven by speculation that Japan’s new prime minister might support further Bank of Japan tightening. This was perceived as a potential breach of the central bank’s independence, initially weakening the yen. However, a strong yen rally followed when these reports were debunked.

The yen gained further momentum after U.S. data showed a moderate rise in consumer spending for August, coupled with slowing inflation, reinforcing expectations of another large Fed rate cut, with odds now split 50-50.

Technically, USD/JPY’s daily structure is deteriorating as 14-day momentum is slipping below the centerline, potentially turning negative. Moving averages have shifted to a fully bearish alignment, and a double bull-trap above 144.82 (the 23.6% Fibonacci retracement of the 161.80–139.57 drop) is reinforcing bearish sentiment.

Friday’s large bearish daily candle with a long upper wick suggests further downside pressure, while the thickening daily cloud hovering above the price adds to the bearish outlook. A daily close below the 143.00 zone (the 50% retracement of 139.57–146.49 and 10DMA) would solidify the bearish signal, paving the way for declines toward 142.21 (61.8% Fibonacci level) and 141.68 (the August 5 spike low).

Res: 143.16; 143.84; 144.02; 144.85
Sup: 142.21; 142.00; 141.68; 141.20