Insights 
VT 
The USD/JPY pair saw a decline of over 2%, falling from around 150.91 to 147.28, driven by disappointing US employment data and a subsequent rise in safe-haven demand. At present, the pair is trading near its weekly lows at 147.38, with a weekly loss of 0.18%.
The movement below the 200-day Simple Moving Average (SMA) at 149.49 enabled further decreases, prompting tests of previous lows. The pair’s current momentum is somewhat bearish, indicated by the Relative Strength Index (RSI), hinting at further potential drops.
Key Support Levels
If the pair falls below the 147.00 mark, the next support levels will be at 145.85 from July 24 and then between the 100 and 50-day SMAs at 145.71. Beyond this, the 144.00 level becomes the next target for support.
The Japanese Yen, one of the world’s top-traded currencies, is influenced by various factors including Japan’s economic performance, BoJ policies, and the differential between US and Japanese bond yields. Generally viewed as a safe haven, the JPY tends to strengthen in times of financial uncertainty, attracting those seeking reliable investments.
We are seeing a significant shift in the USD/JPY pair following the weak US jobs report from yesterday, August 1, 2025. The data, showing job growth of only 95,000 against an expected 180,000, has fueled speculation that the Federal Reserve may pause its tightening cycle. This immediately strengthened the Yen as a safe haven.
Given the break below the 200-day moving average, we believe derivative traders should consider strategies that profit from a further decline. Buying put options with strike prices below the current 147.38 level appears attractive for the coming weeks. These positions would benefit if the pair tests the key support around 145.85.
Interest Rate Differential
The outlook is further supported by the narrowing interest rate differential between the US and Japan. While US 10-year Treasury yields have fallen to 3.8% on the weak data, the Bank of Japan has recently signaled a potential shift away from its ultra-loose policy later this year. This policy divergence is a strong fundamental driver for a lower USD/JPY.
We have seen a similar pattern before, looking back to the sharp decline in late 2023. During that period, speculation about a Fed pivot and a BoJ policy change caused the pair to drop significantly from above 151 to near 140. The current setup echoes that environment, suggesting a similar downward trend could unfold.
For those with a lower risk appetite, selling out-of-the-money call spreads could be a viable strategy. This involves selling a call option and buying another at a higher strike price to cap potential losses if the pair unexpectedly reverses. This approach allows us to collect premium while betting that the pair will not rise significantly above current levels.
