USDJPY Retreats from Two-Week Peak as Bull Trap Risks Emerge
USDJPY eased from a fresh three-week high on Friday as traders locked in profits following a near two-week rally.
The pullback was driven by a combination of technical and fundamental factors, including overbought daily stochastic readings, stretched 14-day momentum indicators, a bearish turn in the RSI, and ongoing speculation about a possible currency intervention. Market participants remain alert to the readiness of Japanese authorities to step into the market again, while recent remarks by President Trump expressing concern over the yen’s weakness during talks with Japan’s prime minister have added to intervention-related concerns. The recent advance also stalled near key technical resistance at the base of the narrowing daily Ichimoku cloud and the 55-day moving average.
A potential bearish reversal is beginning to take shape on the daily chart, with renewed downside pressure testing initial Fibonacci support at 157.58, representing the 23.6% retracement of the 152.88 to 159.03 rally. However, additional downside follow-through is needed to confirm the emerging reversal signal.
The latest decline has also invalidated a recent break above the 158.62 Fibonacci barrier, the 76.4% retracement of the 160.39 to 152.88 decline, raising the risk of a bull-trap formation and reinforcing the negative technical outlook.
A daily close below 157.58 is seen as the minimum requirement to maintain bearish momentum and open the way for a deeper correction toward the 156.80/70 area, where the 10-day moving average converges with the 38.2% Fibonacci retracement level.
Res: 158.05; 158.45; 158.86; 159.03
Sup: 157.58; 157.35; 156.68; 155.96
