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The emergence of the Japanese yen’s strength has materialized as expected that saw the USD/JPY recording a week-to-date drop of -0.9% at this time of writing and breaking below the first support of 146.60 highlighted in our previous report (printed an intraday low of 146.21 on Thursday, 14 August).

Dovish Fed Funds rate futures pricing triggered by US Treasury Secretary‘s jawboning

The recent bout of Japanese yen strength has been yesterday’s jawboning by a key US White House official, the US Treasury Secretary Bessent, during a prime-time television interview, urging the US Federal Reserve to be more dovish, and suggested cutting interest rates by 150 basis points (bps) or more, starting with a 50 bps in the upcoming September FOMC meeting.

Based on the latest data from the CME FedWatch tool, the Fed Funds futures market has now started to price in a possibility of a 52% chance for a third Fed rate cut of 25 bps to occur on the last FOMC meeting of 2025 on 12 December to bring the Fed funds rate lower to 3.75%-3.5%, up from an earlier expectation of 2 rate cuts before Bessent’s media interview.

Let’s decipher the latest technical developments in the USD/JPY and update its short-term directional bias (1 to 3 days) from a technical analysis perspective.

Fig. 1: USD/JPY minor trend as of 14 Aug 2025 (Source: TradingView)

Fig. 2: 5-day rolling performances of the US dollar against major currencies as of 14 Aug 2025 (Source: TradingView)

Fig. 3: US/Japan implied short-term interest rate curve with USD/JPY as of 13 Aug 2025 (Source: MacroMicro)

Preferred trend bias (1-3 days)

Maintain bearish bias in any bounces for the USD/JPY with key short-term pivotal resistance at 147.85 (also the 20-day moving average), with next supports coming in at 145.85 and 145.10/144.80 (also the key medium-term ascending range support in place since 22 April 2025 low) (see Fig. 1).

Key elements

• The hourly RSI momentum indicator of the USD/JPY has dipped into the oversold region (below the 30 level) but has not flashed any bullish divergence condition. These observations suggest a potential imminent minor bounce on the USD/JPY rather than a steeper mean reversion rebound.
• In the past four weeks, the Japanese yen has lagged other major currencies in terms of relative performance against the greenback. Based on the five-day rolling performance as of Thursday, 14 August, the US dollar is now performing the second-worst against the Japanese yen; the USD/JPY has recorded a loss of -0.4%, below the US Dollar Index (-0.1%) (see Fig. 2).
• The monthly implied short-term interest rate spread (via short-term interest rate futures) between the US and Japan has continued to narrow in the next three months from 3.85% in August to 3.60% in September to 3.36% in October, and to 3.23% in November. This narrowing of the US/Japan implied short-term interest rate spread is likely to put downside pressure on the USD/JPY (see Fig. 3).

Alternative trend bias (1 to 3 days)

A clearance above 147.85 invalidates the bearish scenario and sees a squeeze up towards the upper limit of the medium-term ascending range configuration for the next intermediate resistances to come in at 148.75 and 149.50 (also the key 200-day moving average).

Market Overview

The crypto market cap rose to $4.20 trillion on Thursday morning before dropping back down somewhat to $4.14 trillion. But even with the correction, the daily gain is close to 2%, led by Bitcoin’s slide to a new peak of $124.5K. Among the major coins, Cardano (+18%), Near Protocol (+6.2%) and Trump (+5.9%) were the leaders.

The sentiment index rose to 75, ready to move into the extreme greed zone. It was previously held at this level throughout the second half of July, but the entire crypto market was in a range at that time.

Bitcoin gained steadily throughout Wednesday, gliding to a new all-time high of $124.5k in thin early trading in Asia on Thursday, but falling back below $122K at the time of writing. Buyers intensified their push on the back of positive sentiment in global markets, where many key indices were updating their all-time highs.

Among the top altcoins, Cardano stood out over the past day. Its price exceeded $1, last seen in early March, and its growth today is about 15%, almost doubling the price from its lows in early July. The bullish breakout is supported by the formation of a ‘Golden Cross’, when the 50-day moving average tops the 200-day MA. Such technical signals work very well on relatively small financial instruments. The potential target for the bulls now looks like the $1.15 area — the resistance area for this year.

News Background

CryptoQuant notes a surge in network activity — the daily transaction volume on the Ethereum network reached a record high of nearly 1.875 million.

On Wednesday, Ethereum exceeded $4,700 for the first time since November 2021 and is aiming for historic highs above $4,800. Polymarket users estimate the probability of the altcoin reaching $5,000 by the end of August to be 71%.

Standard Chartered has raised its forecasts for Ethereum. By the end of the year, ETH could rise to $7,500 and reach $25,000 by 2028. Since June, corporate treasuries and ETFs have accumulated 3.8% of Ethereum’s market supply. Another important event for ETH was the signing of the US GENIUS Act in July, establishing federal rules for stablecoins.

Solana exceeded $200 for the first time since 23 July, despite potential profit-taking by major players. The Hong Kong crypto exchange OSL HK launched Solana trading for retail investors. At the same time, public companies continue to accumulate SOL. For example, DeFi Development Corp. (DDC) reported owning 1.3 million SOL worth about $250 million.

This week, forex traders’ attention is firmly on the AUD/USD market following key news releases from Australia:

→ Tuesday: Interest rate decision. According to ForexFactory, analysts’ forecasts were confirmed as the Reserve Bank of Australia (RBA) cut the cash rate from 3.85% to 3.60%.

→ Today: Labour market statistics revealed that the unemployment rate fell from 4.3% to 4.2%.

This dynamic fundamental backdrop has driven a rich technical setup on the AUD/USD chart, where bearish sentiment currently prevails.

Technical Analysis of the AUD/USD Chart

Since last month, AUD/USD price movements have been forming a descending channel (highlighted in red), and this week’s reversal from the August high reinforces its relevance.

Key factors emphasising the market’s bearish bias include:

→ Double top pattern formed by recent highs A and B. Notably, the long upper wicks of the candlesticks reflect increasing selling pressure.

→ The August upward move, marked by purple trendlines, may represent a corrective bear flag within the dominant downtrend.

→ Bearish RSI divergence – present not only between highs A and B, but also relative to the 7 July peak.

Potential Support Levels:

→ Lower purple trendline;

→ Line Q, which divides the upper half of the channel into two quarters;

→ The 0.65 psychological level – previously defended strongly by bulls, as evidenced by the wide bullish candle on 12 August, when price surged easily (a sign of buying imbalance).

These supports collectively form a key demand zone (shaded in purple). Bears will need significant momentum to break through this area and extend the prevailing downtrend in AUD/USD through August 2025.

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San Francisco Fed President Mary Daly pushed back against the idea of a 50bps rate cut at the September FOMC meeting, a move strongly advocated earlier this week by Treasury Secretary Scott Bessent. In a Wall Street Journal interview, Daly said such a large cut would send an “urgency signal” that doesn’t match her view of the economy’s strength.

“I’m worried it would send an urgency signal that I don’t feel about the strength of the labor market,” she noted.

Daly stressed there’s no need to “catch up,” pointing to a still-solid job market. That's in contrast to Bessent's view that if the Fed had seen recent job market data sooner, it could have cut in June and July and now “needs to catch up.”

Eurozone industrial production fell sharply by -1.3% mom in June, missing expectations of a -0.8% mom drop. The breakdown showed a mixed picture, with energy output up 2.9% mom, but declines in other categories: intermediate goods -0.2% mom, capital goods -2.2% mom, durable consumer goods -0.6% mom, and a steep -4.7% mom fall in non-durable consumer goods.

Across the EU, output slipped -1.0% mom. The largest monthly declines came from Ireland (-11.3%), Portugal (-3.6%), and Lithuania (-2.8%). On the upside, Belgium (+5.1%), France (+3.8%), Sweden (+3.8%), and Greece (+3.3%) posted notable gains.

Full Eurozone industrial production release here.

Sterling’s broad-based rally resumed today following stronger-than-expected Q2 GDP data, with gains seen across most counterparts except Yen. While the upbeat figures support the currency in the near term, some economists remain skeptical about the durability of the momentum. Part of June’s strong rebound is viewed as a catch-up in activity after the UK and US reached a trade deal limiting tariffs to just 10%.

Still, with this week’s labor market data showing wage growth remaining elevated despite some slowing, there is little urgency for the BoE to accelerate beyond its current pace of one cut per quarter. The combination of solid data and a measured policy approach continues to provide Sterling with a favorable backdrop.

Technically, GBP/AUD is extending its rebound from 2.0420, with today’s break above 2.0743 confirming short-term bottoming. This also suggests the correction from 2.1643 high has completed after three waves down. Further gains are now in view towards 2.1034 resistance. Firm break there will likely pave the way for a retest and possible break of 2.1643 to resume the larger up trend.

The major dollar pairs, particularly USD/JPY and USD/CAD, remain under moderate pressure as market participants react to a softer US inflation backdrop and heightened expectations of a Federal Reserve rate cut at the upcoming meeting. Additional downward pressure on the greenback stems from US Treasury Secretary Scott Bessent’s remarks, in which he allowed for a 50 bps reduction as the opening move in a monetary easing cycle. Against this backdrop, the US currency is giving up part of its recent gains; however, its further trajectory will depend on incoming data.

Today’s focus is on US releases that could trigger heightened volatility and potentially lead to a breakout of key ranges: initial jobless claims and a batch of data on the headline and core Producer Price Index (PPI). Market reaction to these indicators could prove pivotal: signs of cooling price pressures and a weakening labour market may reinforce expectations for a deeper rate-cut trajectory, whereas strong readings could restore some support for the dollar.

USD/JPY

Following a sharp rebound from 150.90 and the formation of a bearish engulfing reversal pattern, USD/JPY has been consolidating for the second consecutive week within the 146.60–148.60 range. Early this week, buyers attempted to break through resistance at the upper boundary of this range. Technical analysis suggests a possible test of 145.80–146.00, as the failed breakout attempt resulted in the formation of a dark cloud cover pattern. A sustained move above 147.00 could pave the way for a return to the upper boundary of the range.

Key events that may influence USD/JPY’s direction:

• Today, 15:30 (GMT+3): US Initial Jobless Claims
• Today, 15:30 (GMT+3): US Producer Price Index (PPI)
• Tomorrow, 02:50 (GMT+3): Japan GDP

USD/CAD

After a two-week bullish run that stalled at 1.3880, USD/CAD is trading in a narrow 1.3720–1.3800 range. A break below the lower boundary could open the way for a test of the key 1.3700 support level. Conversely, a decisive close above 1.3800 could lead to a retest of the August high.

Key events that may influence USD/CAD’s direction:

• Today, 21:00 (GMT+3): Speech by FOMC member Thomas Barkin
• Tomorrow, 15:30 (GMT+3): US Core Retail Sales
• Tomorrow, 15:30 (GMT+3): Canada Wholesale Sales

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Daily Pivots: (S1) 199.59; (P) 199.94; (R1) 200.47; More...

A temporary top is formed at 200.26 and intraday bias in GBP/JPY is turned neutral for consolidations. Near term outlook will stay bullish as long as 195.01 support holds. Above 200.26 will extend the rally from 180.00 to 100% projection of 180.00 to 199.79 from 184.35 at 204.14.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.

Daily Pivots: (S1) 0.8607; (P) 0.8631; (R1) 0.8643; More...

Immediate focus is now on 38.2% retracement of 0.8354 to 0.8752 at 0.8600 as fall from 0.8742 accelerates. Sustained break there indicate near term bearish reversal and target 61.8% retracement at 0.8506. Strong rebound from current level will maintain bullishness for another rise through 0.8752 at a later stage.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the down trend from 0.9267 (2022 high). But even if it's a correction, further rise is expected to 61.8% retracement of 0.9267 to 0.8221 at 0.8867. This will remain the favored case as long as 55 W EMA (now at 0.8497) holds.

Daily Pivots: (S1) 172.16; (P) 172.59; (R1) 172.94; More...

EUR/JPY's steep decline and strong break of 171.53 support suggests that rebound from 169.69 has completed. Corrective pattern from 173.87 is extending with fall from 172.99 as the third leg. Intraday bias is back on the downside for 169.69. Strong support is expected from 38.2% retracement of 161.06 to 173.87 at 168.97 to complete the pattern. On the upside, above 172.99 will bring retest of 173.87.

In the bigger picture, considering current strong momentum as seen in the rally from 154.77, corrective pattern from 175.41 could have already completed. Decisive break of 154.77 will confirm long term up trend resumption. Next target is 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, rejection by 175.41, followed by firm break of 55 D EMA (now at 169.64) will delay this bullish case.