Carry Trade – Monthly Analysis

USD/JPY dropped sharply during the final two days of July. Today, we will evaluate how this move affected the pair’s mid- and long-term outlook. In a market full of noise, interventions, policy shifts, and constant speculation, the larger technical structure has continued to follow the same roadmap. In this USD/JPY analysis, we reassess the pair through major currency dynamics, technical signals, and long-term structure to determine whether the bullish path remains intact, what could invalidate it, and what may shape the next major move. CANDLES Last week, we discussed the technical stretch as an early warning of a potential pullback. This week, that pullback materialized—and it was sharper than expected. As a result, USD/JPY lost the 200 DMA on the daily frame, while the weekly is now approaching the 50 WMA. Both timeframes have also formed bearish reversal candles. The monthly candle closed as a Bearish Engulfing, although the pair…