Spotlight: USD/JPY

2026-08-03

USD/JPY plunged 2.1% in a single session to 156.76, its steepest one-day decline in months and the exclamation point on a brutal week that has now erased 4.19% from the pair. The yen’s violent appreciation carries the hallmarks of a positioning washout, with markets seemingly repricing Bank of Japan hawkishness against a backdrop of broad dollar softness — and the specter of Tokyo intervention chatter only adding fuel to the unwind.

The technical damage is severe. Price has broken decisively below both the 50-day EMA at 161.35 and the 200-day EMA at 159.88, and the gap between those two averages has narrowed to the point where a bearish crossover looks imminent. The 14-day RSI has collapsed to 21.5, deep in oversold territory, signaling that the sell-off is stretched but not necessarily exhausted. Momentum-driven declines of this magnitude in dollar-yen have historically overshot before finding a floor.

That floor, for now, sits at 155.22 — the lower boundary of the 20-day range and the most obvious magnet for price in the near term. A clean break below it would open the door toward the 153 handle, while any stabilization attempt faces stiff resistance at the former support zone around 159–160, now reinforced by both EMAs.

For the coming days, the path of least resistance remains lower, though the oversold RSI argues for a reflexive bounce toward 158 first. Traders should treat any recovery as corrective until price reclaims the 200-day EMA. A test of 155.22 looks more likely than not before the week is out.

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