USDJPY Weekly Analysis 02/08/2025

Fundamental analysis

1. Overview of Momentum and Market Structure

• Current Momentum: Bearish.

• Previous Week's Performance: Bearish.

• Range: 155.88 – 150.92

• Expectations: Anticipating a Bearish continuation within the range, targeting new lows.

Trading Plan

Bearish Bias

• Strategy:
  Watch for price action rejections at the following resistance levels:

  • 153.70 (weekly FVG)

  • 154.16(Daily FVG)

• Targets:

  • Primary target: 150.92 (Extreme Liquidity) and 150.70 (Daily FVG) .

  • Secondary target: 149.96 (Weekly OB) and 148.64 (Extreme Liquidity)

For Long

• Strategy:
  Monitor price action at the following support levels for potential reversals:

  • 150.92 (Extreme Liquidity)

  • 150.70 (Daily FVG)

  • 149.96 (Weekly OB)

  • 148.64 (extreme Liquidity)
    

• Confirmation:
  Look for reversal patterns such as bullish engulfing candles or order block formations before entering long positions.

• Targets:

  • Primary Targets: 152.42 (Internal Liquidity) and 152.81 (Internal Liquidity).

  • Extended Targets: 153.70 (Weekly FVG) and 154.16 (Daily FVG).

Summary

• The bias remains bearish within the 155.88– 150.92 range.

• Short entries are favorable around resistance levels (13.70, 154.16) with confirmation.

• Long opportunities may arise near or below 150.92, 150.70, 149.96, 148.64 if signs of exhaustion emerge.

• Use your strict money management rules to manage risks effectively.

Technical analysis

The USD/JPY pair dropped to the 153.00 level, its lowest since December, as strong wage growth in Japan fueled expectations of further Bank of Japan (BoJ) tightening. December’s nominal wages surged 4.8%—the fastest in nearly 30 years—while real wages rose 3.6%, reinforcing the BoJ’s hawkish stance.

Adding to Yen strength, Japan’s service sector expanded for the third consecutive month, with the PMI climbing to 53.0 in January, its highest since September 2024. Meanwhile, the US Dollar weakened as softer job market data and declining job openings (7.6M vs. 8.09M prior) increased bets on Federal Reserve rate cuts.

With BoJ policy tightening and the Fed leaning dovish, the narrowing US-Japan rate gap favors further Yen appreciation. Geopolitical risks, including Trump’s tariff threats and US-China trade tensions, add to JPY’s safe-haven appeal. Traders now await key US economic data for further direction.