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      USD/JPY Rejected at 163.70: Is the Rally Losing Momentum Ahead of the Fed?

      Gerik

      Forex

      Summary:

      USD/JPY is trading around 163.60–163.70 after retreating from an intraday high near 163.80. The easing of Middle East tensions has reduced safe-haven demand for the U.S. dollar...

      Sell

      USDJPY

      EXP
      Trading

      163.700

      Entry Price

      162.300

      TP

      164.350

      SL

      163.853 0.000 0.00%

      0

      Point

      Flat

      162.300

      TP

      CLOSING

      163.700

      Entry Price

      164.350

      SL

      Market Overview

      USD/JPY remains close to its highest level in four decades, supported by the wide interest-rate differential between the United States and Japan. However, the pair started the week on a softer footing after news of a pause in U.S. military operations against Iran triggered a sharp decline in oil prices and improved global risk sentiment. The softer geopolitical backdrop weakened broad U.S. dollar demand and encouraged modest buying of the yen.
      Despite today's weakness, the broader trend remains constructive because the Bank of Japan is still expected to maintain an accommodative policy relative to the Federal Reserve. Nevertheless, with both central bank meetings scheduled this week, market participants are increasingly unwilling to extend long USD positions near yearly highs. This has resulted in declining momentum as USD/JPY repeatedly struggles to sustain gains above 163.70.

      Market Sentiment

      Institutional sentiment has shifted from strongly bullish to cautiously neutral. Investors continue recognizing the fundamental support provided by U.S. yields, but positioning has become increasingly defensive due to intervention concerns and event risk surrounding the Fed and BoJ meetings.
      Trading activity also indicates profit-taking near current levels. While medium-term investors remain constructive on USD/JPY, short-term traders are increasingly favoring range trading until fresh monetary policy guidance provides a clearer directional catalyst.

      Technical Analysis

      USD/JPY Rejected at 163.70: Is the Rally Losing Momentum Ahead of the Fed?_1
      On the M15 timeframe, Bollinger Bands (20,0,2) have begun narrowing after the recent rally, with price repeatedly failing to close above the upper band around 163.70–163.80. This reflects weakening bullish momentum and suggests volatility compression before the next directional move.
      The Ichimoku Kinko Hyo (9,26,52) continues to place price above the Kumo, confirming that the broader intraday trend remains bullish. However, the Tenkan-sen has flattened while price is trading noticeably above the Kijun-sen, indicating the pair has become stretched and is vulnerable to a short-term mean reversion. A pullback toward the Kijun-sen would remain consistent with the prevailing uptrend.
      The Stochastic (5,3,3) is in overbought territory and has produced a bearish crossover, signaling fading buying momentum. Immediate resistance is located at 163.95, followed by 164.30, while initial support is found near 162.90, with stronger demand around 162.30. Unless buyers achieve a decisive breakout above 163.95, the M15 technical structure favors a corrective decline from current levels.

      Trading Recommendation

      Entry: 163.70
      Take Profit: 162.30
      Stop Loss: 164.35
      Risk Warnings and Investment Disclaimers
      You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

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