USD/JPY on a daily timeframe is currently carving out a contracting triangle between rising support around 143.00–143.50 and descending resistance near 146.00–147.00, with volatility clearly diminishing as shown by the steady decline in ATR. This pattern indicates a common consolidation phase where market participants await a catalyst before breakout.
Looking back, the pair fell from the high-148 area in late June and has since been trading within tighter daily ranges, with recent closes oscillating around 143.5–144.5 . The lower highs at each new bounce confirm the descending triangle’s upper boundary. Meanwhile, the triangle's flat-ish base is ascending slightly from the mid-June low near 141.6, suggesting balanced bullish and bearish pressures.
Technical indicators show the RSI hovering mid-range , neither overbought nor oversold, supporting a neutral short-term bias . Stochastic also remains in mid-late phases without clear divergence. Moving averages (green 50‑day, blue 100‑day, yellow 200‑day) are converging, and price action is compressed between them. ATR has clearly been trending downward over recent weeks, confirming declining volatility and tightening range.
The main scenario envisions a triangle breakout before, most likely on strong fundamental data; if the U.S. dollar gains on disappointing fundamentals or dovish Fed direction, USD/JPY could break above the 145.0–146.0 resistance, potentially testing 147–149. A break above the upper triangle trendline with accompanying volatility expansion (ATR bounce) would add confirmation.
An alternative scenario posits a downside break below the triangle's support around 143.0. Should risk sentiment improve, likely softening the dollar, the pair may retest 141.0–141.6. A decisive break below that would confirm bearish momentum, opening room toward 140 and below.
Over the past few days, key fundamental drivers include a collapsing U.S. dollar—its largest slump in five decades—as Trump intensifies pressure on the Fed and U.S. fiscal policy falters, weakening the greenback. Markets remain subdued, with implied volatility muted ahead of the July 9 tariff deadline. This week brings crucial labor data: ADP private employment and non-farm payrolls (expected 110 k) that could swing USD sentiment. Watch those releases closely—they likely trigger the breakout from this volatility-compressed triangle.
SUMMARY:
- USD/JPY is locked in a tightening triangle between 143–147 with volatility crashing, signaling a major breakout is looming.
- Since late June, lower highs and a rising base show bulls and bears in a fierce standoff.
- Key indicators like RSI and moving averages are neutral, but ATR’s plunge confirms the squeeze.
- A break above 145–146 could spark a sharp rally, while a drop below 143 risks testing 141 or lower — all eyes on upcoming U.S. jobs data and Fed moves for the trigger.
