USD/JPY Plunges Toward 150.000 – Breakdown or Big Rebound?

USD/JPY on a 4-hour timeframe 

USD/JPY approaching 150.000, will it break or bounce? 

USD/JPY on a 4-hour timeframe has exhibited a significant downtrend following a prolonged consolidation phase near the 153.639 resistance level. The pair previously attempted to break above this level but faced rejection, leading to a downward move. Prior to the decline, the price traded in a tight range, supported by the 50-period moving average (green) before breaking below it, triggering further bearish momentum. The price is now approaching the psychological support level at 150.000, which has historically acted as a key area of interest. 

In recent price action, USD/JPY has continued its downward trajectory, with successive lower highs and lower lows confirming the bearish structure. The pair is currently testing the 150.000 support level, and a break below this region could accelerate selling pressure. The moving averages confirm the bearish outlook, as the 50-period (green), 100-period (blue), and 200-period (yellow) moving averages are positioned in descending order, signaling a strong downtrend. 

Momentum indicators suggest oversold conditions, with the 14-period RSI hovering around 29, indicating that the asset may be reaching exhaustion in the short term. The Stochastic oscillator also signals extreme oversold conditions, with both %K and %D lines trending near the lower bound, reinforcing the possibility of a short-term corrective bounce. However, bearish divergence observed earlier indicates underlying weakness in buying pressure. 

The primary scenario favors a continuation of the bearish trend if USD/JPY breaks and closes below the 150.000 support level. In this case, further downside toward 147.271 could be expected, a key level of historical support. Given the strong bearish momentum, sellers are likely to remain in control unless a strong bullish catalyst emerges. 

The alternative scenario considers a corrective bounce if buyers defend the 150.000 support level. A rebound from this area could push the price back toward the 153.639 resistance zone, aligning with the 50-period moving average. However, sustained buying pressure would be needed to challenge the higher resistance levels at 156.822 and 158.798. 

Traders should remain cautious as USD/JPY faces heightened volatility driven by diverging monetary policy expectations and key economic data. Japan’s stronger-than-expected Q4 GDP growth (0.7% vs. 0.3% forecast) and rising core inflation (2.5% YoY in Tokyo) have reinforced expectations of BoJ tightening, with markets eyeing a potential rate hike as early as March. Meanwhile, the Fed’s dovish stance contrasts with the BoJ’s hawkish tilt, adding downward pressure on USD/JPY. Key events ahead include Japan’s national inflation data on Friday, Shuntō wage negotiations, and potential BoJ policy signals, all of which could accelerate yen strength. Additionally, Fed minutes and statements emphasizing a prolonged pause may cap USD upside. Market sentiment leans bearish, with risks skewed toward further yen appreciation if upcoming data and policy signals align with tightening expectations. 

Summary:

• Key Resistance and Support: The USD/JPY pair is trading near the 150.000 psychological support level after failing to break above the 153.639 resistance. 
• Bearish Technicals: A downtrend is confirmed by successive lower highs/lows, descending moving averages, and oversold momentum indicators like RSI and Stochastic. 
• Potential Scenarios: A break below 150.000 may drive prices to 147.271, while a bounce could push the pair back toward 153.639 and higher resistance levels. 
• Economic Catalysts: Upcoming economic events, including Japan's inflation data and BoJ policy signals, alongside contrasting Fed stances, are key to the pair’s future direction