As the USD/JPY chart shows, the pair posted solid bullish momentum in the second half of February. This move was driven by a combination of fundamental factors, including:

→ The appointment of two academics to the central bank’s board, both regarded as strong advocates of economic stimulus through a weaker yen and accommodative lending conditions.

→ Concerns over further interest rate hikes, voiced by Japanese Prime Minister Sanae Takaichi during a meeting with Bank of Japan Governor Kazuo Ueda.

Expectations of a softer yen led to renewed weakness in the currency (A→B), forming the upward trajectory highlighted in purple.

However, on Wednesday the pair retreated, which appears to be an interim pullback from point B. Technical analysis of the USD/JPY chart suggests that extending the move along the purple trajectory may prove challenging.

Factors that could favour the bears include:

→ The median line of the ascending channel (constructed from key reversal points marked by thicker lines). The median often acts as a balance zone where supply and demand converge and trends lose momentum.

→ The proximity of the significant 157.70 resistance level, which already acted as resistance in 2025. Although price broke above it in January 2026 (with the level briefly showing signs of support), following the sharp sell-off on 23 January it once again served as a barrier for bulls on 9 February.

→ Trend line R, drawn through the lower highs of 2026.

Therefore, it cannot be ruled out that the lower purple boundary may be breached by bears, potentially leading the market into a period of consolidation while awaiting fresh economic and political catalysts.

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