USD/JPY Recovery Attempts Face Headwinds from Death Cross and Descending Daily Cloud

USD/JPY remains supported and has moved toward the upper end of its four-day consolidation range, although recovery attempts continue to face headwinds from waning bullish momentum and a newly formed 55/200-day moving average death cross. A significant resistance zone at 158.33/92, reinforced by the declining 55-day moving average, the 20-day moving average, and the 76.4% Fibonacci retracement of the 160.39/152.93 decline, continues to cap gains.

Further upside may also be challenged by the prospect of a hawkish Bank of Japan stance, as persistently elevated inflation keeps policymakers alert. At the same time, expectations of a Federal Reserve rate hike in October have eased following softer-than-expected U.S. labor market data.

Daily technical indicators remain mixed to bearish, while the Ichimoku cloud has turned lower and begun to widen, adding another layer of resistance to recovery attempts. The cloud base, currently at 159.36, is likely to remain a key hurdle alongside other technical barriers.

For now, a clearer directional signal is still lacking. A sustained break above the moving averages, the Ichimoku cloud, and the lower high at 159.03 would strengthen the bullish outlook. Conversely, a move back below 157.52, the broken 61.8% Fibonacci retracement, followed by a deeper decline through support at 156.64, where the daily Kijun-sen aligns with the broken 50% retracement, would confirm a bearish continuation signal.

Market participants will closely monitor the release of the FOMC September meeting minutes on Wednesday for fresh clues on the Federal Reserve’s policy path.

Res: 158.33; 158.62; 158.86; 159.03
Sup: 157.52; 156.95; 156.64; 155.75