Dollar-Yen Exchange Rate Hit Multi-Month Lows; Australian Dollar Approaches Major Resistance
By David Scutt, Market Analyst
April 16, 2025
As traders move into a season characterized by thinning market liquidity ahead of the Easter holiday, the foreign exchange markets are witnessing significant movements in the USD/JPY and AUD/USD currency pairs. Recent market activities suggest that traders should closely monitor upcoming data releases and central bank decisions that could lead to increased volatility.
USD/JPY Declines Below 142.00
In a notable development, the USD/JPY exchange rate has dropped below the crucial threshold of 142.00, marking its lowest closing level since September of the previous year. This decline, which resumed following a brief pause on Tuesday, came amid reports of new export restrictions imposed on NVIDIA’s H20 chips to China. Such news has intensified selling pressure on the U.S. dollar in the Asian trading session.
Despite a stronger-than-expected report from U.S. retail sales and neutral comments from Federal Reserve Chair Jerome Powell, the dollar failed to find support against the yen. This downward movement has raised concerns among traders, especially considering historical patterns where USD/JPY has bounced from the 142.00 level multiple times in recent months.
If the breakout below 142.00 holds, bears might target the trendline support established in February, currently identified around 141.30. Should this downside breach be successful, it could lead to a potential drop towards 139.60, echoing previous performances after similar breaches. On the flip side, failure to maintain this downtrend could see the pair moved back towards 144.00. Technical indicators are increasingly pointing to bearish momentum, with both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) showing growing downward trends. Nevertheless, a countertrend rally could emerge if there are favorable developments in trade negotiations.
AUD/USD Testing Significant Resistance
The Australian dollar is also at a key juncture, currently testing major horizontal resistance around 0.6391 and a rising trendline resistance at approximately 0.6415. This uptrend line, which was previously support until it was breached, is of particular interest as it has only been tested once since the breakout—with the pair decisively rejected on that occasion.
The momentum indicators for AUD/USD suggest upside potential exists, yet the recent rally appears to be slowing down, necessitating strong bullish signals to extend the movement. A failure to surpass the 0.6391 resistance level could shift market sentiment towards a bearish outlook, bringing the 50-day moving average and the lower boundary at 0.6188 into focus for potential short positions.
The anticipated March employment report from Australia is likely to be a crucial catalyst for determining direction in the AUD/USD pair. Set for release at 11:30 AM AEST, the report is expected to reveal an increase of 40,000 jobs, following a significant reduction in February primarily due to disruptions from Cyclone Alfred. Although the unemployment rate is projected to rise slightly to 4.2%, markets often react more vigorously to the jobs figure, which could result in heightened volatility.
Conclusion
With both USD/JPY and AUD/USD at significant technical levels and critical economic data on the horizon, traders are clearly advised to remain vigilant as the markets prepare for potentially explosive movements. The interplay of upcoming labor market indicators and central bank policy decisions will significantly shape currency dynamics in the coming sessions.
Follow David on Twitter @scutty for ongoing market analysis and updates.
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