JPY - The dollar weakened as US-China trade tensions escalated again

The yen rebounded as concerns about US-China trade tensions weighed on risk appetite, while comments from Federal Reserve Chairman Powell suggested the Fed would continue its rate cuts. Last Friday, US President Trump's threat to impose triple-digit tariffs on Chinese goods sparked market concerns. While tensions eased over the weekend, both China and the US began imposing additional port fees on shipping companies on Tuesday, covering everything from holiday toys to crude oil. Furthermore, with the US government shutdown entering its 14th day, markets have been struggling with a dearth of economic data. The dollar remained under pressure following Powell's remarks, in which he stated that policymakers would decide on further rate cuts "meeting by meeting" and that the Fed may be nearing the end of its quantitative tightening program.

Technical charts show that USD/JPY has been trading sideways between 145 and 149 over the past month. With recent sharp gains, the exchange rate has broken through its 250-day moving average and the 150 level, pushing the RSI and Stochastics oscillators sharply higher from oversold territory. This suggests that USD/JPY is embarking on a significant uptrend. Last Tuesday, the pair surpassed key levels: the August 1 high of 150.91 and the July 31 high of 150.83. Despite Friday's pullback, a consolidation above this range would solidify its medium-term upward trend. Extended targets could reach 153.30, followed by the February 12 high of 154.79 and the 155 level, with the next level expected to be 156.80. The key support lies at the 150-day and 250-day moving averages at 149.25, as well as the October 3 high of 147.81, the lower end of the gap.

Forecast range:
Resistance: 153.30 – 154.79 – 155.00 – 156.80
Support: 150.80* – 150.00 – 149.25 – 147.81

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