USDJPY stalls after relentless rally — technical update and key levels

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USDJPY has been the most affected major pair since the US Dollar reversal that happened since July 1st, rising to a maximum of 6464 pips (around 4.50%), a consequential move in Forex.

Beyond the position covering due to oversold and overpositions US Dollars adding to a conclusion of a weekly Head and Shoulders in the Dollar Index, Yen traders haven't been able to find any fundamental reason to be long that currency.

Japan's monetary policy, despite being more hawkish than the past 20 years, is still loose – especially compared to the US which keeps pushing back their cuts (strong data obliges).

Furthermore, a lack of new communication from the Bank of Japan is also considered as a hesitancy to turn more hawkish – This comes despite a Japanese inflation that has been strong for some months now.
BoJ Speakers still estimate that inflation might not be solidly anchored to their long-term targets and such words are once again considered dovish.

There has been a trend of the CHF overpassing the Yen in terms of the best option of a Safe-Haven currency, notably due to a more historically stable Franc, with the Swiss National Bank having a much more durable balance sheet. This had led to major financial outflows towards the Franc at the expense of the Yen.

Also, do not forget that Trump sent a letter menacing 25% tariffs on Japan that would deeply hurt its export-centered Economy.

But all of this just explains the fundamental themes that brought the pair here in the past weeks – let's take a look at what technicals will move the pair for upcoming trading.

Read More: Asia stocks resilient, Gold rebounds, Nasdaq 100 at risk of bearish reversal

USDJPY Technical Analysis

USDJPY Daily Chart

USDJPY Daily Chart, July 16, 2025 – Source: TradingView

Today's session marks the first doji after 3 strong bull daily candles, taking the pair just above the extremes of its 2-month range.

Technical reactions right now will be key to spot if the market wants to keep buying back their US Dollars (as the DXY gets at interesting levels, coming at a resistance) or if the urge to sell Yen is stronger.

The pair is just shy of its 200-Day Moving Average (149.43) which would be the furthest possible measure within the monthly range extremes as any trading above would be considered as a breakout.

The Daily RSI is right in overbought territory, and this is where any extension further would point to a simply stronger USD demand.

USDJPY 4H Chart

USDJPY 4H Chart, July 16, 2025 – Source: TradingView

The Pair is stalling right above the May highs attained with rumours of the US Federal Court potentially blocking the Trump tariffs (which did not materialize).

The key levels where we are trading may lead to two scenarios in the immediate timeframe: A consolidation around here as 4H Momentum is way overbought or a retracement to the 148.00 Pivot Zone.

Staying around current levels would point to higher chances of an upside breakout which gets confirmed above the 149.43 200 MA level – However, breaching below the Pivot Zone would lead to a technical re-entry into the 2 month range, still a possibility where we are currently trading.

Resistance Levels:

• Range Extremes 148.70 to 149.43 (Daily MA 200)
• 150.00 Psychological Level
• 151.20 March Highs

Support Levels:

• Pivot at War Highs 148.00 Zone
• 146.50 Resistance turned Support (Zone with 4H MA 50)
• 145.00 Psychological Support

USDJPY 1H Chart

USDJPY 1H Chart, July 16, 2025 – Source: TradingView

Zooming further shows the details of an upwards hourly channel that USD buyers have used to bring the pair to current levels.

Staying within the channel gives relative advantage to USDJPY Bulls (lower bound of channel is right at the 148.00 level) but prices would need to exceed the 149.185 current highs for further continuation – The high of the channel is located at 149.73 (above the Daily 200 MA)

Any break below would also confirm a re-entry within the range.

1H Momentum is back to neutral with the current consolidation, therefore watch how prices move within the 1H Channel to get your bias in check.


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