As markets digest a wave of global trade developments and corporate guidance downgrades, attention now turns to key economic data out of the UK and Canada. With retail sales figures set to provide fresh insight into consumer resilience, traders will be closely watching for confirmation—or contradiction—of prevailing growth concerns. Meanwhile, USDJPY remains in a technical downtrend despite a recent bounce, as mixed signals from momentum indicators and unresolved policy uncertainty keep broader risk sentiment fragile.
High Impact Economic Events
Friday 09:00 am (GMT+3) – UK: Retail Sales m/m (GBP)
Since topping out at 158.866 on January 10, USDJPY has maintained a persistent downtrend, confirmed by a series of bearish candlestick formations and the presence of a failure swing pattern—a classic sign of a weakening bullish structure. The downtrend was further reinforced by the formation of a “Death Cross,” as the 20-period Exponential Moving Average (EMA) crossed below the 50-period EMA, signaling medium-term downside momentum.
That said, the pair rebounded from the April 22 low of 139.877, following the appearance of a bullish Harami reversal pattern. Despite this technical development, momentum indicators offer little support for a sustained recovery. The Momentum Oscillator remains suppressed below the 100 baseline, and the Relative Strength Index (RSI) continues to trade beneath the 50 neutral level—both consistent with a prevailing bearish bias.
Moreover, the broader trend context remains intact, with price action still trading below the 50-period EMA and the 20-period EMA maintaining a downward slope. Unless the pair can reclaim these key moving averages, the path of least resistance remains to the downside.
Key Resistance Levels
If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:
145.063: The first level of resistance is projected at 145.063, which aligns with the weekly resistance, R2, calculated using the standard methodology.
146.530: The second price target is seen at 146.530, corresponding to the trough marked March 11.
151.199: The third price target is seen at 151.199, corresponding to the peak from March 27.
154.794: An additional upside target is determined at 154.794, reflecting the daily high from February 12.
Key Support Levels
If sellers maintain control of the market, traders may focus on the following four key support levels:
142.581 The initial support level is seen at 142.581, representing the weekly Pivot Point, PP, estimated using the standard methodology.
139.877 The second support level is positioned at 139.877, aligning with the trough marked on April 22.
138.609: The third downside target is noted at 138.609, corresponding to the weekly support, S3, estimated using the standard Pivot Points methodology.
134.443: An additional downside target is determined at 134.443.
Fundamentals
Several major US firms have revised or withdrawn their profit forecasts, pointing to mounting economic uncertainty tied to trade tensions and rising input costs. Executives across industries warn that unpredictable tariff policies are complicating planning and increasing the risk of an economic slowdown. Some companies have also indicated the potential for price increases to offset higher expenses, while others cite the current environment as too volatile for reliable financial projections. Although recent trade discussions show some promise, broader uncertainty lingers as the temporary pause on tariffs approaches its expiration.
On the other hand, Japan has unveiled an emergency economic package aimed at cushioning the blow from new US tariffs. The measures include subsidies for fuel and electricity, expanded access to low-interest loans for smaller businesses, and support for corporate financing. Prime Minister Shigeru Ishiba emphasized the importance of protecting key sectors like automobiles and steel and signaled that additional steps may be taken to stimulate domestic demand. The move follows US tariff hikes on Japanese goods, with further trade talks scheduled to continue in Washington next week.
Conclusion
In conclusion, markets remain delicately poised as economic data and trade negotiations intersect with technical uncertainty. While retail sales from the UK and Canada may offer clues about underlying consumer strength, broader sentiment continues to be shaped by tariff dynamics and policy signals. For USDJPY, the prevailing downtrend and muted momentum indicators suggest caution remains warranted, with price action likely to remain sensitive to both macro headlines and chart-based triggers in the near term.
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