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A threatening technical signal is taking shape in the dollar yen exchange rate, giving President Trump and Treasury Secretary Scott Bessent reason to welcome the currency market’s latest turn. The pattern suggests momentum may have shifted decisively toward the Japanese yen.

The signal is known as a death cross, and current trajectories indicate it could be confirmed before the end of next week. Although the pattern does not guarantee a major decline, it can reinforce evidence that a new trend has begun.

Bessent previously declared to financial markets, “I am the house now.” Recent trading has lent support to that message as the rapid rise in the dollar yen rate, which threatened Japan’s economy and was unwanted by the Trump administration, appears to have reversed.

On Friday, the dollar yen rate dropped 1% in afternoon trading, putting it on course for its largest one day decline in three weeks. Bessent also posted on X about Trump’s endorsement of the “desirability of a strong yen,” a goal sought by the Bank of Japan.

A stronger yen against the dollar pushes the dollar yen rate lower. Friday’s move arrived at a technically significant moment and provided additional evidence that the currency pair’s 17 month upward trend may have been broken.

Government efforts to guide markets can provoke skepticism among investors. When officials discourage purchases of an asset, traders can respond with defiant interest because the warning may suggest authorities believe the rally will continue without direct intervention.

The source pointed to the British pound’s collapse in 1992 and the Asian financial crisis of the late 1990s as examples of intervention failing to stop markets. It also cited Bessent’s recent efforts to slow the rise in longer term Treasury yields.

The U.S. Treasury and the Bank of Japan collaborated in late July to halt the continued climb in the dollar yen exchange rate. Many believed any initial decline would fade and that the forces behind the rally would eventually reassert themselves.

That expectation appeared plausible after the currency pair briefly regained strength. But on Sept. 3, the rate broke below a trend line that had tracked its advance from the April 2025 lows, weakening the technical foundation of the rally.

Buyers subsequently returned, lifting the rate back toward the trend line in an apparent test of whether the break would hold. Friday’s selloff confirmed the break, adding weight to the argument that the former upward trend had lost its grip.

The reversal also followed an unsuccessful attempt by the dollar yen rate to climb back above its 200 day moving average. Chart watchers commonly treat that average as a dividing line between longer term upward and downward trends.

“Today's failure at the 200-day moving average leaves the [currency] pair vulnerable to a test of 152 support, near the 2026 lows,” Ari Wald, head of technical analysis at Oppenheimer & Co., wrote in emailed comments to MarketWatch.

A death cross occurs when the 50 day moving average, a widely watched tracker of shorter term trends, moves below the 200 day moving average. Traders see the crossover as a sign that a shorter decline may be developing into a longer downward trend.

Based on the current paths of those averages, the crossover should happen before the end of next week. It would be the first death cross for the dollar yen currency pair since March 25, 2025.

After that March signal, the currency pair fell another 6% before reaching a bottom about one month later. The previous death cross appeared on Sept. 9, 2024, but prices bottomed one week later after declining only another 1.8%.

That mixed record is why death crosses are not necessarily reliable market timing tools. Wald put the limitation plainly: “We like to say that every major downside move starts with a death cross, but not every death cross leads to a major decline.”

Even so, Wald believes the present setup offers a more forceful warning. He said the approaching death cross “aligns with a broad loss of momentum,” and it “strengthens the case for a trend reversal.”

For Trump and Bessent, the technical deterioration points toward the currency outcome they have favored. For dollar bulls, however, the charts are flashing a warning that the yen’s comeback may no longer be a temporary interruption.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.