USD/JPY Bulls Battle Bearish Backdrop Ahead of Key Inflation Data

The USD/JPY currency pair has been experiencing a dichotomous backdrop, as evidenced by its longer-term charts illustrating a clear shift into a more bearish environment. However, on a shorter-term basis, bulls have continued to push in after pullbacks.

Last week saw a resistance test at 159, which drove a pullback to a support level at 156.68. This level provided a 100+ pip bounce yesterday, but the bulls failed to continue the push.

The weekly chart reveals a recent shift in the USD/JPY pair, with a similar push-pull dynamic observed over the past five years. This can be attributed to positioning, as a crowded trade sees incremental gains on the way up, followed by a furious retracement driven by the prospect of change.

Since July, the dual intervention from the U.S. and Japan has contributed to this shift. Despite the recent test and stall at the 159.00 level, buyers have continued to push prices higher, with the pair currently holding support at 156.68.