Major economic events ahead include the ECB’s rate decision, U.S. GDP and jobless claims, and inflation data from Germany, Canada, and the U.S. These releases could drive volatility as central banks assess policy shifts.
USDJPY remains in a downtrend after failing to hold key resistance, with momentum indicators signaling further weakness. The Fed maintains a cautious stance on rate cuts, while the Bank of Japan’s recent rate hike has strengthened the yen. With policy divergence in focus, traders should prepare for potential market swings.
High Impact Economic Events
Thursday 15:15 (GMT+2) – Europe: Main Refinancing Rate (EUR)
Thursday 15:30 (GMT+2) – USA: Advance GDP q/q (USD)
Thursday 15:30 (GMT+2) – USA: Unemployment Claims (USD)
Friday All Day – Europe: German Prelim CPI m/m (EUR)
Friday 15:30 (GMT+2) – Canada: GDP m/m (CAD)
Friday 15:30 (GMT+2) – USA: Core PCE Price Index m/m (USD)
Chart Analysis
Since bouncing off the low of 148.637 on December 3, which was triggered by a Long-legged Doji Star, the USDJPY rallied above the 50-period Exponential Moving Average (EMA) to reach a high of 158.866. However, the bulls were too weak to sustain this rally, leading to a decline in the USDJPY exchange rate below both the 20-period and 50-period EMA, signaling the start of a downward trend. Additionally, the formation of a failure swing reversal pattern—where the peak at 156.743 did not surpass the previous peak and subsequently fell below the trough at 154.763—intensified selling pressure.
Momentum indicators also suggest strengthening bearish conditions. The Momentum Oscillator has dropped below the critical threshold of 100, indicating ongoing downward pressure, while the Relative Strength Index (RSI) remains comfortably below the neutral level of 50, reflecting sustained selling interest. Collectively, these technical factors suggest the potential for further declines in the near term, assuming market conditions remain favorable.

Key Resistance Levels
Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:
156.233: The initial resistance level is identified at 156.233, aligning with the trough marked on January 6.
156.850: The second price target is set at 156.850, representing the weekly resistance, R1, calculated using the standard Pivot Points methodology.
157.787: The third price objective is observed at 157.787, corresponding with the weekly resistance, R2, calculated using the standard Pivot Points methodology.
158.866: An additional upside target is projected at 158.866, mirroring the peak marked on January 10.
Key Support Levels
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
153.539: The initial support level is estimated at 153.539, corresponding to 161.8% Fibonacci Extension drawn from the swing low, 154.763, to the swing high, 156.743.
152.890: The second support level is identified at 152.890, representing the weekly support, S3, calculated using the standard Pivot Points methodology.
151.559: The third support level is seen at 151.559, reflecting the 261.8% Fibonacci Extension drawn from the swing low, 154.763, to the swing high, 156.743.
148.637: An additional downside target is 148.637, mirroring the daily low from December 3.
Fundamentals
Federal Reserve Chair Jerome Powell signaled that the central bank is in no hurry to lower interest rates, emphasizing the need to see sustained progress on inflation before making any adjustments. The Fed kept rates steady at 4.25%-4.5% after last year’s rate cuts, citing strong economic growth and a solid labor market as reasons for its cautious approach. Powell also noted that the Fed is waiting to assess the economic impact of President Trump’s policies on immigration, tariffs, and taxes. While some economists see signs of inflation cooling, uncertainty remains, particularly with potential policy shifts and trade changes. Markets reacted with Treasury yields fluctuating and the S&P 500 closing lower.
On the other hand, the Bank of Japan raised its key interest rate to 0.5%, the highest since 2008, as Governor Kazuo Ueda moves to normalize monetary policy. Analysts expect two more hikes in April and July. The yen strengthened as traders interpreted an upward revision of inflation expectations as a hawkish signal.
Conclusion
With high-impact economic events on the horizon, market volatility remains a key concern as traders navigate shifting monetary policies. The Fed’s cautious stance on rate cuts contrasts with the Bank of Japan’s move toward normalization, reinforcing policy divergence as a major theme. USDJPY’s downtrend, coupled with bearish technical signals, suggests further downside risk. As economic data unfolds, traders should remain vigilant, assessing market reactions and adjusting strategies accordingly.