Selling USDJPY amid concerns over US fiscal situation with target at 140,900

Opening at 143.633 on Thursday, the lowest level in the last two weeks, USDJPY is showing a steady decline. Growing concerns about the US fiscal situation put pressure on the dollar, increasing the yen's attractiveness as a defensive asset.

President Donald Trump's draft tax bill, which could add about $3.8 trillion to the US national debt, is causing serious concern among investors. The bill has negatively affected the attractiveness of the country’s assets and the dollar. Investors fear that the increase in public debt will put pressure on the US fiscal situation, making the dollar less attractive in the eyes of market participants.

Meanwhile, a weak auction of 20-year US Treasury bonds confirmed fears of reduced demand for US assets. Bond yields reached a record 5.047%, indicating growing investor uncertainty about the prospects of the US economy. Such results increase the pressure on the dollar and confirm the current trend towards its weakening.

At the same time, the Japan’s economy demonstrates mixed results. The manufacturing activity remains under pressure due to US tariffs. Output price inflation fell to a four-year low, while business confidence improved slightly after falling in April. Expectations of further monetary policy tightening by the Bank of Japan (BoJ) support the yen despite weak industrial sector figures. Against this backdrop, the yen remains attractive to investors, especially amid rising global risks and uncertainty around US trade policy.

The technical setup for USDCAD points to an evident downward trend. The pair trades below key EMA (20) and EMA (50) levels. The Stochastic oscillator remains near the oversold zone, which may signal a possible short-term correction. The first support level is located near 142.971, if it is broken, the quotes are able to go to 140.900, while the resistance is 144.700, at the level near EMA (20).

Current recommendation:

Sell USDJPY at the current price. Take profit – 140,900. Stop loss – 144,700.