USDJPY and Nasdaq Challenge Defining Supports

Key Events
• Despite softer CPI and stronger NFP results, the Nasdaq has failed to build sustained bullish momentum, raising downside risks as dollar pairs remain supported by rate-hold expectations.
• AI-related concerns continue to limit bullish appetite across US indices, pressuring the Nasdaq below  the 24,600 mark.
• USDJPY is attempting a rebound in line with the DXY’s hold above 97, yet key resistance levels remain a challenge.

CNN Fear and Greed Index

 

Although softer CPI and strong NFP data would typically support a constructive market tone, sentiment currently reflects fatigue and caution, particularly in the Nasdaq. The index has recorded multiple failed attempts to break above the 26,000 threshold since October 2025, leading to an extended consolidation phase.

This repeated pullback cycle has weighed on investor confidence, especially amid AI-sector turbulence and an uneasy political backdrop.

US economic data continues to show resilience. January NFP beat expectations with 130,000 jobs added, marking the strongest report since July 2025. Meanwhile, CPI eased toward levels last seen during that period, moving closer to the Federal Reserve’s target at 2.4%.

However, expectations for a rate hold over the coming months persist. Rate-cut sentiment begins to strengthen toward June, according to the CME FedWatch Tool, keeping markets in a cautious holding pattern.

While US indices, precious metals, and major currency pairs sit near critical support levels, dollar pairs are simultaneously approaching key resistance zones that must be cleared to confirm a sustainable bullish rebound.

Technical Analysis: Quantifying Uncertainty

USDJPY Outlook: Weekly Time Frame – Log Scale

Source: Tradingview

Relative to the April 2025 lows, USDJPY remains on a constructive uptrending support. However, when measured from the 2026 highs, the current move appears corrective in nature.

The 154.80–155 resistance zone stands as a decisive barrier before bullish territory can be reclaimed. A confirmed break above this area would reopen the path toward the upper bound of the ascending channel respected since the 2025 lows, exposing 157.80 and 158.80, and potentially the 160 zone — levels that could attract intervention risks due to currency stability concerns.

On the downside, the pair is testing the 152 support level for the third time. This area remains pivotal. A hold could redirect price higher, while a sustained break may extend losses toward 149.

Nasdaq Outlook: Weekly Time Frame – Log Scale

Source: Trading view

From a weekly perspective, the Nasdaq has recorded more than five pullbacks from the 26,000 threshold, increasing distribution risks ahead of a potential drawdown.

Support near 24,500 continues to hold, while resistance around 25,800 caps upside attempts. Momentum remains near the neutral 50 level from above, keeping the index at technical crossroads.

Bullish scenario:
A close back above 25,200 followed by a sustained break above 25,800 would shift the bias higher toward the 26,300 record high and potentially new thresholds beyond 27,000.

Bearish scenario:
A weekly close below 24,500 would expose 24,200, 23,900, and 22,900 as potential downside targets. These levels may attract dip-buying interest depending on momentum conditions.

The more extreme reset scenario — applicable not only to the Nasdaq but also to Nvidia, the Dow Jones, and the S&P 500 — would involve a retracement toward the former resistance zone defined by the December 2024 and February 2025 highs. For the Nasdaq, this area aligns near 22,200 and would represent a broader momentum reset.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves