USDJPY – Bears Reassess Key Near-Term Support

USDJPY fell 0.7% in Asia on Tuesday following comments from a Japanese official that added pressure on the central bank to implement more rate hikes to further strengthen the yen.

These latest remarks have boosted the yen’s sentiment, though most analysts expect the Bank of Japan (BoJ) to keep rates unchanged at the next policy meeting.

Fresh weakness is testing key support at the 155.70 zone (the daily cloud base and the 61.8% Fibonacci retracement of the 151.85/161.95 uptrend), where a bear trap formed last week after a strong downside rejection.

The reaction at the daily cloud base (spanning from 155.87 to 156.30 and thickening in the coming days) will be crucial for determining the near-term direction.

A sustained break below the cloud base and the nearby July 18 low/100-day moving average (155.35) would generate a strong bearish signal, paving the way for a deeper correction towards targets at 154.23/153.60.

Weakening daily indicators (strong negative momentum and moving averages in a bearish setup) support this outlook, though the risk of another downside rejection remains.

Upticks should ideally be capped by the converging 10-day and 55-day moving averages (157.81) to maintain the bearish stance.

Only a lift and close above the daily Tenkan-sen/Kijun-sen (158.56/65) would sideline the bears and signal the formation of a higher base.

Resistance: 156.30; 156.83; 157.81; 158.56
Support: 155.71; 155.35; 155.00; 154.54