It has been a lively start to the week for tech investors with Nvidia weighing on the broader market and yields, while investors sought the safety of the yen following news of open-source AI by China’s DeepSeek. And this keeps my downside targets for USD/JPY alive and well.
By : Matt Simpson, Market Analyst
It has been a lively start to the week for tech investors on Monday, with Nvidia shares plunging -17% and dragging the tech sector and US stock market broadly lower. A Chinese startup company called DeepSeek deployed a free AI assistant using Nvidia’s less-advanced H800 chipset, claiming it took just two months and less than $6 million to build the models. They also claim that their models can match or outperform US models at a much more competitive price, which has ignited concerns of an AI price war and brings into question the billions already spent by US firms on AI technology.
And this clearly places the performance of the US tech sector and appetite for risk under close watch, and incoming earning reports from Microsoft (MSFT), Tesla (TSLA), Meta Platforms (META) and Apple (Appl) under a magnifying glass. Investors are likely assess data with a lot more scrutiny than previously, with any signs of overspending or a lacklustre outlook likely to be punished.
- Nasdaq futures fell -4.9% by the day’s low before closing -2.8% lower. S&P 500 futures were down a more modest -1.4% whereas Dow Jones futures erased earlier losses for a 0.7% gain on Monday
- The Philadelphia Semiconductor Index (SOX) suffered its worst daily drop in over four years, at -9.2%
- US yields were also lower as traders moved into the safety of bonds, sending the 10-year yield to a 4-week low of 4.5%. A head and shoulders top appears to be forming which projects a downside target around 4.35% which lands near a 38.2% Fibonacci ratio
- AUD/USD led commodity currencies lower among FX majors during risk-off trade
- The Japanese yen and Swiss franc were the strongest FX majors, the USD index was also lower, which saw USD/JPY fall -0.9% by the day’s close
Click the website link below to read our exclusive Guide to AUD/USD trading in 2025
https://www.forex.com/en-us/market-outlooks-2025/FY-aud-usd-outlook/
Economic events in focus (AEDT)
- 10:50 – JP corporate services price index
- 11:30 – AU business confidence (NAB)
- 16:00 – BP core CPI (BOJ)
- 00:30 – US core durable goods
- 02:00 – US consumer confidence (Consumer Board)
- 02:30 – US GDPnow (Atlanta Fed)
- 04:00 – ECN President Lagarde speaks
Click the website link below to read our exclusive Guide to USD/JPY trading in 2025
https://www.forex.com/en-us/market-outlooks-2025/FY-usd-jpy-outlook/
USD/JPY technical analysis:
The next leg lower for USD/JPY appears to be underway, which keeps my bias of a move down to 153 alive. Monday’s high-to-low range of 1.7% was larger than the BOJ’s hawkish meeting on Friday, although support was found perfectly at the high-volume-node (HVN) at 153.72.
The 1-hour chart shows a rising wedge has occurred since Monday’s low and the weekly S2 pivot (153.84), which could suggest another leg lower (or also comparable to a dead-cat bounce). The initial downside target is 153.8, just above Monday’s low and the base of the rising wedge pattern. A break beneath 153.70 assumes bearish trend continuation and brings the 153 handle and weekly S3 pivot and 152.65 bear-flag target into focus for bears.
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.