USDJPY – downside momentum stalls after almost 3% loss this week

USDJPY rebounded on Monday as partial profit-taking followed last week’s nearly 3% decline, the steepest weekly drop since November 2024.

The yen’s recent strength was driven by a softer US dollar and improving sentiment after Prime Minister Takaichi’s election victory, which boosted optimism around Japan’s economic outlook.

However, recovery attempts have so far been capped by the initial Fibonacci barrier at 153.54, representing the 23.6% retracement of the 157.69–152.26 decline. This suggests that the current rebound may remain corrective in nature, potentially offering more favorable levels for renewed selling interest.

Technical signals remain mixed. The 14-day momentum indicator has turned higher from negative territory, while stochastic is attempting to reverse from oversold conditions. At the same time, moving averages continue to maintain a bearish alignment, reinforcing the broader negative bias.

The next significant resistance is seen at 154.32, the 38.2% Fibonacci retracement, while the 153.90 area—coinciding with the daily cloud base and the 50% retracement—could cap extended upticks and mark a healthy correction before bearish pressure resumes.

A large weekly bearish candle, which also completed a bearish engulfing pattern, continues to weigh on the near-term outlook and supports the prevailing downside scenario.

Res: 153.75; 154.32; 154.90; 155.68
Sup: 152.60; 152.26; 152.00; 151.05