Last week, the US dollar had seen some contradicting inflation reports, starting with the CPI coming in as a relief for investors before the PPI took all of that back. The 0.9% beat on both the headline and core data points to the first hits from tariff-led inflation. With the EU/US and Russian geopolitics also into play, let’s look at the most traded currency pair.
Federal Reserve Chair Jerome Powell appeared at the Jackson Hole Symposium last Friday, an economic conference that assembles many key financial and economic figures, including central bank governors from around the globe.
Despite nuancing his words and tone, the market interpreted what Powell said as a dovish signal, sending the US dollar shooting down and all other currencies and risk assets flying.
Right after his speech, USDJPY got sent down 1.44% at the pair’s trough, but it had rebounded after; however, it still closed down 0.99% on the session.
Let’s look at the technicals to spot where volatility brought the most volatile currency pair and levels for this upcoming week.
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USD/JPY Daily chart, August 25, 2025 – Source: TradingView. Past performance is not indicative of future results.
Similarly, as in other currency pairs, the US dollar peak from August 2025 has helped the yen to strengthen decently. The Japanese currency had been weakening strongly last month from fears of prolonged policy rate divergence with its other major counterparts.
USDJPY saw a swift reversal and is now trading back within its 142.00 to 149.50 May trading range.
To regain the range fully, traders will have to break the 146.50 support zone acting as immediate support, however, the move still hasn’t been done.
In the meantime, the pair has held in a 1500 pip consolidation between 146.50 to 148.00 since the beginning of August as can be seen with the much indecision doji candles, with the 200-day MA acting as resistance.
The 14-period Relative Strength Index is hanging around neutral and is giving no immediate signs of change.
Nonetheless, the RSI is a lagging indicator and may take time to adapt to an immediate move.
In terms of technical patterns to watch for the pair this week, a head and shoulders pattern could be into play (see the purple drawings on the charts).
Looking at the Dollar Index, it could prove useful to assist if the US dollar weakens more or consolidates from here, prompting further moves or lack thereof for USDJPY.
Levels to watch for the currency pair:
Resistance Levels
- Pivot at the 148.00 zone (immediate resistance)
- May range extremes from 148.70 to 149.50 (daily MA 200 in confluence)
- 150.00 psychological resistance
Support Levels
- 146.50 mid-range and immediate support (Daily MA 50 in confluence)
- 145.00 psychological support
- 142.35 low of May range main support
This article is for general information purposes only, not to be considered a recommendation or financial advice. Past performance is not indicative of future results. It is not investment advice or a solution to buy or sell instruments.
Opinions are the authors; not necessarily those of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors.
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