The USD/JPY price analysis shows some relief for the yen amid renewed warnings against excessive declines. Japan’s top officials are becoming increasingly concerned about the weak yen. On the other hand, the dollar was vulnerable as the market digested recent reports that Trump might go easy on tariffs.

On Tuesday, Japan’s Finance Minister Katsunobu Kato warned traders against selling the yen. He emphasized that the government would take appropriate action to respond to excessive currency declines. 

The USD/JPY pair is quickly approaching the 160.00 level, prompting Japan to intervene last year. Therefore, market participants might be cautious since an intervention could momentarily reverse the trend. However, fundamentals point to further weakness for Japan’s currency, especially if the BoJ fails to hike interest rates soon. 

Notably, the dollar has a bright future under Trump’s administration. At the same time, the Federal Reserve is planning to reduce interest rates in 2025 gradually. Therefore, the gap in interest rates between Japan and the US will remain wide. 

Meanwhile, market participants will pay close attention to US data for more clues on Fed rate cuts. This week, the US will release its crucial nonfarm payrolls report. An upbeat report will further boost the dollar, while a downbeat report will increase Fed rate cut bets, hurting the greenback.

USD/JPY key events today

• US ISM services PMI
• US JOLTS job openings

USD/JPY technical price analysis: Bullish momentum wanes

(Click on image to enlarge)

USD/JPY 4-hour chart

On the technical side, the USD/JPY price has attempted to breach the 158.02 resistance level again. However, it has pulled back below and is about to retest the 30-SMA support. Bulls are struggling to resume the previous trend. However, the bullish momentum is fading. The last trend peaked when the price met the 158.02 support level. Since then, it has remained in consolidation, with support at 156.03 and resistance at 158.02. 

At the same time, while the price has made a higher high, the RSI has made a lower one, indicating a bearish divergence. Therefore, bears might be ready to take charge. If this happens, the price will break below the 30-SMA and the 156.03 range support level.

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