The USD/JPY pair extended its decline on Wednesday, pressured by comments from Japan’s Ministry of Finance (MoF) officials and remarks by US Treasury Secretary Scott Bessent, who highlighted the need for Japan’s new government to allow the Bank of Japan (BoJ) sufficient room to address inflation. The pair last traded near 152.27, maintaining a softer tone.
Bearish Signals Emerge
A weaker USD/CNY also weighed on the pair, amplifying downside pressure. Market attention now turns to the BoJ’s policy meeting on Thursday, where no rate hike is expected before March 2026, according to current market pricing.
However, OCBC analysts note that conditions remain conducive for eventual policy normalization, depending on the tone and guidance from the central bank.
Technical Outlook: Signs of Reversal Building
From a technical standpoint, bullish momentum on the daily chart has faded, while the Relative Strength Index (RSI) continues to decline. A double-top pattern has formed—typically a bearish reversal signal—suggesting potential for further downside if confirmed.
Key support levels are seen at:
- 151.15 – 21-day moving average (DMA)
- 150.10 – 23.6% Fibonacci retracement (April low to October high)
- 149.20 – next major support zone
Resistance is located at 153.30, corresponding to the double-top formation.
OCBC adds that the Fed–BoJ policy divergence remains the key driver for USD/JPY, with risks skewed toward the downside in the near term.