The remainder of the week features a cluster of high-impact economic events that could significantly influence currency markets, especially the USDJPY pair. With key releases, including the ECB’s rate decision, U.S. unemployment claims, and labor data from both the U.S. and Canada, volatility is likely to pick up. Traders are watching USDJPY closely as the pair remains under sustained bearish pressure ahead of these critical updates.
High Impact Economic Events
Thursday 15:15 (GMT+3) – Europe: Main Refinancing Rate (EUR)
The USDJPY currency pair has exhibited a consistent downward trajectory since reaching a peak of 158.866 on January 10, characterized by a series of lower highs and lower lows—an unmistakable sign of prolonged bearish momentum. The decline encountered interim support at 139.877 on April 22, where the formation of candlestick reversal patterns indicated waning selling pressure and an emerging shift in buying interest.
More recently, the pair’s inability to sustain a breakout above 146.275 underscores the diminishing strength of bullish momentum, reinforcing the likelihood of continued downside movement. Additionally, price action remains constrained beneath both the 20-period and 50-period Exponential Moving Averages (EMAs), further affirming the prevailing bearish outlook.
Momentum indicators corroborate this perspective. The Momentum Oscillator remains suppressed below the critical 100 threshold, signaling persistent downside bias, while the Relative Strength Index (RSI) remains below 50, confirming the sustained presence of negative momentum.
A decisive break below the 142.106 support level could pave the way for further downside, signaling sustained bearish pressure and opening the door for additional losses.
Key Resistance Levels
Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:
144.114: The initial resistance level is established at 144.114, which mirrors the weekly Pivot Point, PP, calculated using the standard methodology.
146.275: The second price target is set at 146.275, reflecting the peak formed on May 29.
148.641: The third price objective is observed at 148.641, corresponding to the daily high from May 12.
151.199: An additional upside target is projected at 151.199, mirroring the daily high formed on March 28.
Key Support Levels
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
142.106: The initial support level is seen at 142.106, corresponding to the trough marked May 27.
139.877: The second support level is estimated at 139.877, representing the daily low marked on April 22.
137.785: The third support level is identified at 137.785, reflecting the weekly support, S3, calculated using the standard Pivot Points methodology.
135.361: An additional downside target is 135.361, mirroring the 261.8% Fibonacci Extension drawn from 142.106 to 146.275.
Fundamentals
U.S. services sector activity contracted in May, with the Services PMI registering 49.9%, down from 51.6% in April. This marks the first contraction since June 2024 and only the fourth since June 2020. Business activity held steady at 50%, while new orders dropped sharply to 46.4%, signaling weakening demand. Employment edged back into expansion at 50.7%, and supplier deliveries slowed further, with that index at 52.5%. Prices surged to 68.7%, the highest since late 2022, driven in part by tariff-related pressures. Inventories fell back into contraction, and order backlogs declined further. Overall, the report reflects growing uncertainty, especially around tariffs and demand outlook.
Moreover, private sector hiring in the U.S. slowed significantly in May, with only 37,000 jobs added, marking the lowest monthly increase in over two years. The figure fell short of both April’s revised 60,000 jobs and the 110,000 forecast by economists. Despite the hiring slowdown, wage growth remained steady, with annual pay rising 4.5% for job-stayers and 7% for job-changers. The weak job report prompted President Donald Trump to call for interest rate cuts, urging the Federal Reserve to take action.
Conclusion
With key economic data on the horizon and USDJPY trading under sustained bearish pressure, markets are poised for heightened volatility. Traders should monitor upcoming labor market releases and central bank signals closely, as they may provide critical direction for price action and broader sentiment heading into next week.
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