The US Dollar is expected to trade in a range of 142.30 to 144.30 against the Japanese Yen. In the longer term, the possibility of the USD continuing to decline remains, although reaching 139.55 is uncertain due to oversold conditions.
Following a plunge, the USD was expected to weaken further, with support at 143.05 and 142.50. However, the USD rebounded sharply to close at 143.51, suggesting it is unlikely to weaken further in the immediate term. A trade within the 142.30/144.30 range is anticipated.
Broader Perspective
In a broader perspective, the USD has displayed a negative trend since early this month. Despite falling below the 142.50 support level, the likelihood of reaching 139.55 currently remains unclear due to oversold conditions. A breach of 145.50 would suggest the USD might not weaken further.
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The recent rebound in the Dollar from below 143.00 back to 143.51 interrupted expectations of a further short-term slide. For now, that recovery signals the near-term downside may have run into temporary exhaustion. It’s not that the earlier pressure on the Dollar has vanished—it hasn’t—but momentum to push price further down this week appears lacking. That could create short-term two-way interest within the 142.30 to 144.30 region.
Taking a broader view, we’ve observed a persistent downtrend throughout the month. That has not changed despite some stabilisation. While the break below 142.50 opened the door to more weakness, particularly toward 139.55, the pair quickly reversed before breaching more meaningful technical thresholds. Current positioning looks stretched, and with oversold signals starting to flash on multiple timeframes, pressing short exposure at these levels becomes increasingly difficult without new downside catalysts.
Behavioural Element
Though that lower 139.55 target has been flagged as a possibility, it’s worth considering how much of the downside has already been accounted for, especially with price action now hesitant to continue past previous lows. The sharp bounce this week, especially closing back above 143.00, hints toward some short covering or speculative unwinding. That move has reduced immediate downside momentum. In the days ahead, traders may want to focus on how USD/JPY respects the edges of this tighter trading range rather than positioning for another swift directional move. Interest around 142.30 and 144.30 may provide better guides than betting on follow-through that has yet to materialise.
What helps here is having clearly defined upper and lower boundaries—143.05 and 145.50 remain focal points—but unless either side breaks cleanly, short-term strategies will need to be more nimble. We’re likely to see pockets of activity around prior inflection levels rather than trending behaviour. Should price edge higher from here and challenge 145.50, that would set into question the entire bearish framework in place since the start of June. But for now, barring a fundamental surprise or policy shift, the more probable scenario is fluctuation rather than extension.
There’s also a behavioural element at play that reinforces this view: when markets hesitate even after confirming a directional move, particularly after taking out previous supports, it suggests positioning may already be crowded. That fits with what we’ve observed in the past week. This is often a time we consider scaling risk accordingly. Momentum trades tend to underperform in choppy ranges, especially if broader macro signals have turned flat or ambiguous.
In the absence of major policy changes from central banks or fresh yield divergence between Japan and the US, this kind of range-bound scenario can persist longer than many expect. Therefore, keeping tighter execution parameters may offer better outcomes than pushing for more ambitious directional targets. As always, respect for technical boundaries and preparedness to reduce exposure where range limits are respected remains paramount.
