Poor housing data sends USD/JPY lower
Weaker US housing data sent the markets into risk-off mode, dragging USD/JPY lower with it.
Share this:
As April housing data winds down, the New Homes Sales print was ugly at -16.6% MoM. Expectations were for -1% MoM vs -10.5% MoM in March. The actual number of 591,000, seasonally adjusted, was the lowest reading for new home sales since April 2020 and well below the expectations of 750,000. This follows last week’s print of Existing Home Sales, which was down -2.4% in April. The actual seasonally adjusted rate was 5,610,000, the lowest level since June 2020. Tomorrow the US will release the MBA 30-Year Mortgage Rate for the Week of May 20th. Last week the rate was 5.49%. Recall that as recently as February, mortgage rates were below 3.5%. The quick, large increase in mortgage rates is one of the main factors that has led to lower home sales.
On the back of poor housing data, a risk-off move ensued, and USD/JPY was on the move lower. The pair had been rising until recently, from a low of 114.65 on March 4th to a high of 131.25 on May 9th! However, since then, USD/JPY has been pulling back, thus forming a Head and Shoulders pattern. With today’s move lower of 130 pips, USD/JPY broke through the neckline of the pattern and is on its way towards the target. The target for a Head and Shoulders pattern is the height from the head to the neckline, added to the breakdown point. In this case the target is near 123.70.
Source: Tradingview, Stone X
On a 240-minute timeframe, USD/JPY has stalled at the 50% retracement level from the low of March 31st to the high of May 9th, near 126.31. If price is to reach the head and shoulders target, it must not only break below this level, but also horizontal support at 125.10, which confluences with the 61.8% Fibonacci retracement level from the same timeframe. Below there, price can fall to the March 4th low at 121.28. Horizontal resistance is just above current price at 127.02. Above there, USD/JPY can move up to the highs from May 20th at 128.30, then a confluence of horizontal resistance at 129.78 and the psychological round number resistance level of 130.00.
Source: Tradingview, Stone X
Weaker US housing data sent the markets into risk-off mode, dragging USD/JPY lower with it. Will the pair continue to move lower towards its head and shoulder target? If so, it may have to come at the expense of more risk-off in the markets.
As April housing data winds down, the New Homes Sales print was ugly at -16.6% MoM. Expectations were for -1% MoM vs -10.5% MoM in March. The actual number of 591,000, seasonally adjusted, was the lowest reading for new home sales since April 2020 and well below the expectations of 750,000. This follows last week’s print of Existing Home Sales, which was down -2.4% in April. The actual seasonally adjusted rate was 5,610,000, the lowest level since June 2020. Tomorrow the US will release the MBA 30-Year Mortgage Rate for the Week of May 20th. Last week the rate was 5.49%. Recall that as recently as February, mortgage rates were below 3.5%. The quick, large increase in mortgage rates is one of the main factors that has led to lower home sales.
On the back of poor housing data, a risk-off move ensued, and USD/JPY was on the move lower. The pair had been rising until recently, from a low of 114.65 on March 4th to a high of 131.25 on May 9th! However, since then, USD/JPY has been pulling back, thus forming a Head and Shoulders pattern. With today’s move lower of 130 pips, USD/JPY broke through the neckline of the pattern and is on its way towards the target. The target for a Head and Shoulders pattern is the height from the head to the neckline, added to the breakdown point. In this case the target is near 123.70.
Source: Tradingview, Stone X
Trade USD/JPY now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, USD/JPY has stalled at the 50% retracement level from the low of March 31st to the high of May 9th, near 126.31. If price is to reach the head and shoulders target, it must not only break below this level, but also horizontal support at 125.10, which confluences with the 61.8% Fibonacci retracement level from the same timeframe. Below there, price can fall to the March 4th low at 121.28. Horizontal resistance is just above current price at 127.02. Above there, USD/JPY can move up to the highs from May 20th at 128.30, then a confluence of horizontal resistance at 129.78 and the psychological round number resistance level of 130.00.
Source: Tradingview, Stone X
Weaker US housing data sent the markets into risk-off mode, dragging USD/JPY lower with it. Will the pair continue to move lower towards its head and shoulder target? If so, it may have to come at the expense of more risk-off in the markets.
Learn more about forex trading opportunities.
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY Q4 2026 Outlook: Hawkish Fed Pricing Clashes With Intervention Risk
The year-end tug-of-war is clear: hawkish Fed pricing supports USD/JPY, while intervention risk limits the upside.
Japanese Yen Forecast: USD/JPY 4% Rally Challenges Post-Intervention Downtrend 9 24 2026
USD/JPY momentum has shifted sharply higher, putting a major resistance confluence in focus as U.S. and Japanese event risk builds.
Oil Quietly Hands the Fed a Reason to Stay Hawkish
Oil prices and the U.S. dollar are both on the front foot as elevated energy costs feed Fed warnings that inflation may prove sticky.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.