Recently, Japan released a strong Gross Domestic Product (GDP) data, demonstrating the resilience of its economic recovery and increasing market expectations for further interest rate hikes by the Bank of Japan. The strong GDP data not only boosted the short-term trend of the Japanese yen, but also consolidated market confidence in the fundamentals of the Japanese economy. In addition, the interest rate differential between the United States and Japan is gradually narrowing, further driving demand for the Japanese yen.

At the same time, the US dollar is generally dragged down by market selling sentiment, and the USD/JPY exchange rate is currently hovering around the 151.80 zone, even hitting a nearly 5-day low during the Asian trading session on Monday (February 17). Although the market is concerned that the reciprocal tariff policy implemented by US President Trump may have some impact on market sentiment, the overall fundamentals still lean towards a bullish yen. However, although there are bullish factors for the Japanese yen on the fundamentals, the US dollar also has some positive support, and the current market is at a critical juncture where long and short forces are intertwined.

Technical analyst interpretation:

From a technical perspective, the USD/JPY is currently in a critical area of the long short game. The current exchange rate is fluctuating around 151.80, and the market is showing a short-term consolidation trend, but overall downward pressure is still evident.

Firstly, in terms of support levels, the 151.45-151.40 region is considered the first critical support in the near future. This range is not only a continuation of the previous low point, but also has a strong psychological support effect. If the support in this area is insufficient, it is highly likely that the market will further decline to the 150.95-150.90 area, which was the low level area touched earlier this month. On the technical chart, both the daily and 4-hour charts show that after stabilizing near the area multiple times, there have been repeated declines, indicating that bearish forces still prevail.

Further observation of the oscillation indicators shows that multiple oscillation indicators on the daily chart remain in the negative range, indicating that the overall selling momentum of the market continues. Although there was a brief buying spree when the price approached support, it failed to form an effective suction and instead allowed the downward trend to continue. If the support level continues to break through, following up with sell orders may trigger a chain reaction of bears, pushing the exchange rate rapidly down to lower areas.

From the perspective of the target level, if the price breaks through the 151.45-115.40 area, the next target will be directed towards the 150.95-150.90 area, and then the downward trend may extend to the important psychological level of 150.00, testing the 149.60-149.55 area, the 149.00 integer, and the 148.65 area near the December 2024 swing low point. The distribution of key low levels indicates a clear downward path in the market, and bearish forces are expected to use the key support levels to further lower the exchange rate.

On the other hand, if the US dollar/Japanese yen attempts to rebound and break through the 152.00 level, it will face significant resistance. The primary resistance is located in the 152.70 area, which is exactly where the 200 day moving average is located. Long term moving averages often have a strong interception effect. Following closely behind is the 100 day moving average, which is currently roughly located in the 153.15 area. Once this moving average is effectively broken through, the market may experience a short covering market, driving a rapid rebound in the exchange rate in the short term. The rebound trend is expected to push the US dollar/Japanese yen to break through the 154.00 mark and further impact towards 154.45-154.50, ultimately testing the 154.75-154.80 area near last week's swing high.

FXCUE concludes that technically, the USD/JPY is currently at a critical watershed in the long short battle. The combination of current oscillation consolidation and negative oscillation indicators shows significant downside risks; Once a key support level is breached, the bearish trend may rapidly expand, catalyzing the market into a deep adjustment phase. On the contrary, if the resistance above can be broken in the short term, it is expected to trigger short covering and form a short-term rebound market.