Spotlight: USD/JPY

2026-08-03

USD/JPY is in freefall, shedding 2.34% on the session to trade at 156.43 and extending a brutal weekly decline of 4.39% that has seen the pair crater from above 163 to the mid-155 area in a matter of days. The move has all the hallmarks of a violent carry-trade unwind, with markets aggressively repricing Bank of Japan policy expectations and traders scrambling to cover long-dollar positions amid persistent intervention chatter from Tokyo. The technical damage is severe: the pair has sliced decisively below both its 50-day EMA at 161.34 and its 200-day EMA at 159.88, and the fact that the shorter average now sits above the longer one underscores how abruptly the uptrend has been shattered rather than gradually eroded. Momentum indicators are flashing extreme readings, with the 14-day RSI collapsing to 20.8, deep in oversold territory and at levels that historically precede at least a technical pause. Yet oversold can stay oversold when structural positioning is being flushed, and volume-driven capitulation moves in yen crosses tend to overshoot before stabilizing. Immediate support sits near the 155.00 psychological handle, with a break opening the door toward 153.50, while any relief bounce faces stiff resistance at 158.50 and then the broken 200-day EMA near 159.90. For the coming days, expect elevated volatility to persist as the market digests BOJ signals and watches for official intervention confirmation. A short-covering rebound toward 158 is plausible given stretched momentum, but rallies are likely to be sold until the pair demonstrates it can reclaim and hold ground above the 200-day average. The path of least resistance remains lower.

Source and Copyright: Traders’ Leadership Council, 2026. Strictly no trading advice.