The USD/JPY currency pair trimmed its early gains on Monday after failing to stay above the 100-day moving average near 148.00. The Japanese Yen strengthened against the US Dollar as safe-haven demand rose following reports of Iran’s attack on US airbases in Qatar.
The US Dollar Index (DXY), which tracks the dollar against six major currencies, fell below the key 99.00 level. The index was last seen near 98.50, reflecting a weakening demand for the US Dollar despite ongoing geopolitical concerns.
Mixed US PMI data added to the dollar’s decline. Manufacturing activity showed slight growth, but the services sector slowed down. Meanwhile, Federal Reserve Governor Michelle Bowman gave dovish remarks. She noted that inflation is moving closer to the Fed’s target and suggested she might support a rate cut as soon as July if disinflation continues. This increased market expectations for a summer policy shift.
USD/JPY began the week strong, extending last week’s momentum to reach an intraday high of 148.03. However, it could not hold above the 100-day Simple Moving Average, a key technical resistance near 147.80–148.00. This failure caused the pair to pull back to around 146.20 during American trading hours.
Technically, the pair had broken out above a multi-month descending triangle last week, which initially pushed it to the new high. Now, it is testing support between 144.50 and 145.00. This zone previously acted as resistance and could turn into a support level if buyers defend it — a common scenario after a breakout.
Momentum indicators show mixed signals. The Relative Strength Index (RSI) has dropped to the mid-50s, avoiding overbought levels. The Moving Average Convergence Divergence (MACD) remains positive but its histogram is flattening, suggesting buying pressure may pause soon.
If USD/JPY closes clearly above 148.00, it could move higher toward 149.50 and possibly the psychological 150.00 level. On the downside, a break below 145.00 could push the pair toward the 50-day moving average near 144.14. This would threaten the recent breakout and shift the short-term outlook to neutral.
