Bearish Move Could Quickly Resume from Local Resistance

Summary:

This behavior suggests the presence of a convergence signal and indicates that bullish momentum may be losing efficiency. Th

Sell USDJPY

EXP

PENDING

156.720

ENTRY

152.020

TGT

159.130

155.612 -0.683 -0.44%

Point

PENDING

152.020

TGT

CLOSING

156.720

ENTRY

159.130

The U.S. Federal Open Market Committee (FOMC) announced a 25-basis-point interest rate increase, in line with market expectations. Following the decision, the target range for the Federal Funds Rate was raised to 3.75%-4.00%.

The accompanying policy statement indicated that policymakers continue to view inflation as elevated, although economic activity remains on a solid growth path. Regarding labor market conditions, the statement noted that employment growth has kept pace with labor force expansion and that the unemployment rate has changed little in recent months.

In addition, the Summary of Economic Projections (SEP) revealed that policymakers still anticipate further monetary tightening before the end of the year. Twelve of the eighteen officials expect one additional 25-basis-point rate increase, while four members project two more hikes. Only two policymakers believe no further adjustments will be necessary during the remainder of the year. Inflation remains the central focus, with officials now forecasting inflation at 3.7% by the end of 2026, compared with 3.6% in the previous projections. Core inflation is also expected to reach 3.4%, slightly above the prior estimate of 3.3%.

During the press conference, Chair Kevin Warsh described the decision as the “right” course of action, arguing that monetary conditions were not sufficiently restrictive. His hawkish remarks fueled speculation that the Federal Reserve could still deliver as many as two additional rate increases before year-end if inflationary pressures remain persistent.

Meanwhile, U.S. President Donald Trump called on the Federal Reserve to cut interest rates to 1% “or lower” only hours after the central bank announced its first rate increase since 2023. The ongoing friction between the White House and the independent Federal Reserve could encourage safe-haven flows and help limit downside pressure in defensive assets such as gold.

Market participants may also remain cautious ahead of the Bank of Japan’s monetary policy decision later on Friday.

The BoJ is widely expected to raise its policy rate to 1.25% at its September meeting, which would mark the highest level in approximately 31 years. The Japanese central bank previously increased its benchmark rate to 1.00% at its June policy meeting, continuing its gradual normalization process.

Investors will be closely watching comments from BoJ Governor Kazuo Ueda regarding the pace of future rate increases and how far the central bank may be willing to extend its current tightening cycle. Policymakers still appear to have room to continue normalizing rates, as the policy rate remains near the lower end of the BoJ’s estimated neutral range between 1.10% and 2.50%, leaving scope for additional tightening if economic conditions allow. Bearish Move Could Quickly Resume from Local Resistance_1

Bearish Move Could Quickly Resume from Local Resistance_1

Technical Analysis

USDJPY continues to trade within a well-defined bearish channel, a structure that has been heavily influenced by efforts from both the U.S. Treasury and the Bank of Japan to support a stronger yen. As long as this broader framework remains intact, rallies toward resistance may continue to provide opportunities for sellers to re-enter the market.

Most recently, the pair rebounded from lower levels and is now approaching the local resistance area at 156.72. This zone gains additional technical importance because the 100-period moving average is currently located at 156.64, while the 200-period moving average sits slightly higher at 157.64. The convergence of these technical levels creates a notable resistance cluster that could attract renewed selling interest. If the market reacts lower from this area, the bearish trend could regain momentum and drive price back toward the lower boundary of the channel, with the psychological 152.00 level acting as a potential downside objective.

Looking at momentum indicators, the Relative Strength Index (RSI) has recovered sharply during the recent rebound and advanced much faster than it did during previous periods when price was trading at higher levels. This behavior suggests the presence of a convergence signal and indicates that bullish momentum may be losing efficiency. The RSI has also reached overbought territory relatively quickly, increasing the possibility that upside strength could fade and allow sellers to regain control of the broader move.

Meanwhile, the MACD continues to display a bullish histogram following the rebound, although it has struggled to build meaningful depth throughout the recovery. At the same time, the signal lines recently crossed into bullish territory, reflecting the short-term upward correction. However, if the histogram begins to turn lower and the signal lines produce a bearish crossover, it would provide additional confirmation that downside momentum is returning and that the broader bearish trend may be ready to resume.

Trading Recommendations

Trading direction: Sell

Entry price: 156.72

Target price: 152.02

Stop loss: 159.13

Validity: Sep 29, 2026 15:00:00

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