Dollar-Yen Death Cross Looms, Threatening US Dollar Decline

A technical signal known as the 'death cross' is looming for the dollar-yen exchange rate, which could indicate a sustained decline in the value of the US dollar against the Japanese yen. This would validate Treasury Secretary Scott Bessent's claim that he has control over market expectations and hand President Trump a policy win.

The death cross occurs when the 50-day moving average falls below the 200-day moving average, which is expected to be confirmed by the end of next week. The last time this pattern occurred was on March 25, 2025, and it was followed by an additional 6% decline before the rate bottomed roughly a month later.

Ari Wald, head of technical analysis at Oppenheimer & Co., notes that 'every major downside move starts with a death cross, but not every death cross leads to a major decline.' However, he argues that the current technical structure gives the death cross added significance, as it is consistent with a broad-based loss of momentum and reinforces the likelihood of a trend reversal.