US Dollar and Canadian Dollar Under Pressure as Japanese Yen Attracts Flows

The Japanese yen is drawing renewed safe-haven demand as geopolitical tensions and tariff risks return to the spotlight. Both USD/JPY and CAD/JPY are flashing technical warning signs, with price action hinting at potential bearish reversals for the US dollar and Canadian dollar against the Japanese yen.

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USD/JPY Technical Analysis: US Dollar vs Japanese Yen

The weekly chart for USD/JPY suggests the pair remains in a broader downtrend, with price action compressing within a symmetrical triangle — a pattern often interpreted as a bearish continuation formation. The triangle projects a downside target near 136.18, although several support zones between 138.50 and 140.00 could cushion the fall without a fresh catalyst for the Japanese yen or US dollar.

Adding to the uncertainty, USD/JPY is currently trading between its 50-week and 200-week exponential moving averages (EMAs), which further muddies the near-term technical outlook for the US dollar to Japanese yen exchange rate.

Symmetrical triangles typically break in the direction of the prevailing trend — in this case, lower — implying a potential bearish breakout for USD/JPY. However, the pair may continue consolidating within the narrowing range until a definitive move unfolds.

One possible catalyst for renewed Japanese yen strength and US dollar weakness could be renewed tariff concerns, which may shift market focus back toward anticipated Federal Reserve (Fed) rate cuts and weaken the greenback.

Chart analysis by Matt Simpson - data source: TradingView USD/JPY

USD/JPY Technical Analysis: Daily Chart

A small inverted hammer has formed on the USD/JPY daily chart near the upper triangle trendline — a potential signal of a swing high. The candle formed beneath a previous bearish pinbar and below the 200-day EMA, reinforcing the bearish setup for the US dollar against the Japanese yen.

Short-term bears could consider fading rallies toward yesterday’s high, placing stops above the 20-day EMA (147.9), and targeting a decline toward the 50-day EMA (154.07). A high-volume node (HVN) at 143.70 also offers a realistic short-term target for USD/JPY sellers.

That said, for USD/JPY to break decisively below these levels, a stronger bearish US dollar catalyst — such as rising expectations of Fed rate cuts or weaker inflation data — is likely required.

Chart analysis by Matt Simpson - data source: TradingView USD/JPY

CAD/JPY Technical Analysis: Canadian Dollar vs Japanese Yen

A steady uptrend has developed on the CAD/JPY daily chart, with the Canadian dollar advancing above its 50-day EMA and reaching a five-month high overnight. However, a bearish two-day reversal pattern — known as a dark cloud cover — has now formed, suggesting a potential pullback may be on the horizon.

Adding to the caution, the pattern formed near the June high, raising the risk of another false breakout. Similar setups in May and June saw failed breaks above monthly highs, followed by pullbacks of varying depths.

With USD/JPY showing signs of weakness as the Japanese yen attracts safe-haven demand amid renewed tariff headlines, there is scope for CAD/JPY to pull back. Traders may look for a retracement towards the 200-day EMA (currently 106.24) or the ascending trendline that has supported the uptrend since April.

Chart analysis by Matt Simpson - data source: TradingView CAD/JPY

Economic Events in Focus (AEST / GMT+10)

09:50 JPY Foreign Bonds Buying, Foreign Investments in Japanese Stocks, PPI (Jun) (USD/JPY, AUD/JPY, CAD/JPY, EUR/JPY, Nikkei 225)
11:00 KRW Bank of Korea Meeting Schedule, Interest Rate Decision (Jul) (USD/KRW, KOSPI)
16:00 EUR German CPI , HICP (Jun) (EUR/USD, DAX)
20:00 GBP Thomson Reuters IPSOS PCSI (Jul) (GBP/USD, FTSE 100)
20:00 EUR Germany Thomson Reuters IPSOS PCSI (Jul) (EUR/USD, DAX)
22:30 USD Continuing Jobless Claims, Initial Jobless Claims, Jobless Claims 4-Week Avg. (USD/JPY, EUR/USD, USD/CAD, S&P 500, Nasdaq 100, Dow Jones, Gold, Crude Oil)
Friday, July 11
00:30 USD Natural Gas Storage (Crude Oil, Natural Gas)
03:00 USD 30-Year Bond Auction (USD/JPY, EUR/USD, USD/CAD, US Treasuries)
03:15 USD Fed Waller Speaks (USD, US indices)
03:30 GBP BoE Breeden Speaks (GBP/USD, FTSE 100)
04:30 USD FOMC Member Daly Speaks (USD, US indices)
06:30 USD Fed's Balance Sheet, Reserve Balances with Federal Reserve Banks (USD/JPY, EUR/USD, USD/CAD)

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