The USD/JPY pair is trading around 144.50, facing low liquidity due to the US Independence Day holiday. The current weekly candle indicates uncertainty, suggesting a possible price breakout. On the daily chart, USD/JPY is within a symmetrical triangle, showing a pattern of higher lows and lower highs since April. The immediate resistance is at the 50-day EMA near 144.90, and support is at 143.50, close to the triangle’s base.

Potential Breakout Scenarios

If the price breaks above resistance, the pair could rise toward 146.50–147.00. Conversely, if it drops below support, it may fall to 142.50 or even the April low of 139.89. The RSI is around 49, indicating a balanced market, but bullish momentum appears weaker. The MACD shows a flat trend, with signal lines suggesting a lack of clear direction. Traders are being cautious, waiting for clearer signals before entering new trades. The Japanese Yen’s value is affected by various factors, including economic conditions, the Bank of Japan’s (BOJ) policies, bond yield differences, and global risk sentiment. The Yen tends to strengthen during market turmoil as it is viewed as a safe-haven currency. Recent BOJ policies are providing some support to the Yen. With the pair consolidating near 144.50 and little movement expected during the US holiday, traders are likely holding off on making significant moves until clearer trends appear. Liquidity is lower than usual, contributing to restrained price action. However, as the price approaches the triangle’s apex, a breakout seems imminent. The tightening range over several weeks usually leads to increased volatility once it resolves. The daily pattern of higher lows since April and lower highs heading toward the 144–145 range has been consistent. Resistance around 144.90 limits progress. However, if the price closes above this barrier, the market may gain confidence and could move toward the 146.50 area, where past price action may create obstacles. We would expect to see increased volume and momentum if a breakout occurs.

Technical Indicators and Macroeconomic Factors

If the price drops below 143.50, particularly with a strong candle close, it would increase the chances of falling to 142.50 first. This level has previously offered support and may pull the price down further, especially if momentum accompanies the decline. A drop to the April low of 139.89 becomes more likely, though a continuation would depend on overall market sentiment. The RSI, just under 50, shows the market’s indecisiveness—it’s neutral territory. There is no strong momentum direction, but slight bullish pressure is fading, which needs close monitoring. If the RSI dips below 45 in the coming sessions while the price remains within the triangle, it would signal a shift toward selling pressure. The MACD has been stable, indicating low trading conviction. With the signal lines tightly compressed, even short-term traders are not taking strong positions just yet. Consequently, volume is lower than average, and the order books are thinned out. Additionally, macroeconomic factors are also being monitored. The Yen is receiving some support from recent changes in central bank policy. While these changes are not interventionist, they signal a gradual change in tone. The appeal of the carry trade has slightly diminished. This, combined with broader risk sentiment shifts, could make the Yen more appealing during global uncertainties—something risk managers will watch closely as new data emerges or external shocks occur. Yield spreads between US and Japanese bonds still favor the Dollar, but there has been a slight narrowing. Any further decrease could put more pressure on this pair, especially if it aligns with a technical rejection from resistance. Moving forward, we will closely observe price behavior around both triangle boundaries. Watching for increased volume and candle bodies extending beyond recent ranges will be crucial indicators. Until one side clearly prevails, it’s wise to maintain a defensive position, focusing on strictly defined stops and being ready to act quickly once a breakout confirmation arrives. Create your live VT Markets account and start trading now.

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