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Published: 7 July 2026,06:26
Daily Market Analysis New
*The Japanese Yen resumed its broader downtrend after last week’s intervention-driven rebound faded.
*Japan’s housing spending rose 3.7%, well above the 1.4% forecast, providing a short-term boost to the Yen and reinforcing expectations of a gradual BoJ policy normalization.
*While the Yen remains fundamentally weak, stronger Japanese data and the possibility of further intervention could limit downside
The Japanese Yen has extended its bearish trajectory in recent sessions following a sharp, short-lived gain last Thursday. That rebound was largely driven by warnings from Japanese authorities regarding potential market intervention to curb excessive yen weakness. However, the currency quickly resumed its broader downtrend as carry trade dynamics and interest rate differentials continued to favor the U.S. Dollar.
Today, the Yen received a temporary boost from stronger-than-expected Japanese economic data. Housing spending growth came in at 3.7%, significantly topping market expectations of 1.4%. This positive surprise highlights underlying resilience in domestic demand and could support arguments for a less accommodative Bank of Japan (BoJ) stance in the medium term.
The near-term outlook for the Yen remains heavily dependent on broader market sentiment. While today’s data provided a constructive catalyst, the currency’s path will likely be dictated by U.S. economic releases, global risk appetite, and any further signals from Japanese officials on intervention. USD/JPY may continue to test higher ground if dollar strength persists, but intervention risks and improving Japanese fundamentals could cap excessive weakness. Traders should monitor risk sentiment closely in the upcoming sessions.
Technical Analysis
USDJPY, H4:
USD/JPY has staged an impressive recovery after experiencing a sharp decline in the previous session, with the pair fully erasing its losses and returning to record-high territory. The swift rebound highlights the resilience of the prevailing bullish trend and suggests that buying interest remains firmly intact despite the recent bout of volatility.
Although the pair has undergone a modest technical pullback following its rally, it continues to hold comfortably above the immediate support level at 161.80. The ability to defend this key support indicates that bullish momentum remains dominant, while the recent retracement appears to be a healthy correction rather than the beginning of a broader trend reversal.
From a technical perspective, the 161.80 level now serves as a crucial pivot for the near-term outlook. As long as USD/JPY continues to trade above this support zone, the broader bullish structure is expected to remain intact, with buyers maintaining control of the market.
Should the pair successfully hold above 161.80, the prevailing uptrend is likely to resume, increasing the probability of another leg higher. Under this scenario, USD/JPY could extend its current rally and register fresh record highs in the near term.
Conversely, a decisive break below the 161.80 support level would weaken the bullish structure and suggest that downside momentum is beginning to build. Such a move could trigger a deeper technical correction as traders take profits after the pair’s strong advance.
Resistance Levels: 162.70, 163.50
Support Levels: 160.85, 159.90
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