Technical Analysis – Yen Index
The Yen index is moving within a clear downtrend on both the 4-hour and daily timeframes. Prices have rejected the 740 level to the downside, which represents a DFVG zone. Price action has successfully broken the previous bullish structure, supporting the bearish continuation on the 1-hour chart with further downside expected.

Yen vs US Dollar
The US dollar continues to enjoy strong support against the Japanese yen due to the widening interest rate gap between the two economies. The Federal Reserve maintains rates near 4.5%, while Japan’s rate stands around 0.5%, making the dollar more attractive for yield-seeking investors. This gap has pushed the USD/JPY pair toward the 146 level, reflecting ongoing pressure on the yen. Despite slowing inflation in the US (2.4%) and rising inflation in Japan (3.5%), the Bank of Japan remains committed to its easing stance, unlike the Fed’s hawkish tone. Additionally, long-term US bond yields above 4.3%, compared to Japan’s 1.5%, continue to drive market appetite toward the dollar through carry trade strategies, further strengthening its position against the yen in the near term.

Liquidity Levels:
A continued price decline is expected, targeting 735.6, followed by the next level at 733.

The current bearish scenario would be invalidated if price revisits the 741 level.