Fed Just Opened the Door — USDJPY Could Bleed Hard!!Hey Traders, in today’s session we are monitoring USDJPY for a selling opportunity around the 156.300 zone. The pair continues to trade within a broader downtrend, and price is now retracing toward a key trend + S/R confluence at 156.300 — an area that has consistently acted as a supply zone for sellers.
Technical Structure
USDJPY remains in a bearish market structure (lower highs / lower lows).
Current pullback is approaching the 156.300 correction zone, where downside continuation becomes highly probable.
Dollar Macro Backdrop: Perfect Storm for USD Weakness
On the other side, DXY broke below its uptrend and is now pulling back toward the 98.800 retracement zone, confirming a broader shift in momentum.
The fundamentals are even more compelling:
1. The Fed did cut yesterday — 25bps.
This reinforces a clear dovish turn, and historically the USD underperforms aggressively in the weeks following the first cut of a new cycle.
2. The Fed's balance sheet is expanding again.
An expanding balance sheet = USD bearish liquidity environment.
3. The January FOMC is currently NOT priced for a cut — and that’s the opportunity.
The market is underpricing the risk of back-to-back cuts.
Now labor market data becomes the main catalyst.
And the reality is:
If we get any sign of further labor market weakness — which is increasingly likely — the market will start pricing in a January cut very fast.
And that leaves MUCH more room for USD weakness across the board.
Trade Focus
Monitoring price reaction at 156.300 for a bearish continuation setup.
If DXY resumes weakness out of 98.800 and labor data disappoints, USDJPY could accelerate aggressively to the downside.
Trade safe,
Joe.
