• USD/JPY remains steady around 139.20 after retreating from a weekly high near the 140.00 mark.
• The 50-hour EMA is on the verge of crossing the 100-hour EMA.
• The immediate resistance emerges at 139.70; the key support level to watch is at 139.00.

The USD/JPY pair holds ground around 139.20 in the Asian trading hours after retreating from a weekly high near the 140.00 mark on Wednesday. That said, concerns over China’s economic slowdown, deteriorating US-China ties, and geopolitical tensions might support the safe-haven Japanese Yen (JPY), which could cap the upside of the USD/JPY pair.

China's Ambassador, Xie Feng, criticized the US's consideration of foreign investment and AI chip restrictions. He added that China would retaliate if the US imposed more curbs on its chip sector in Beijing.

According to the one-hour chart, USD/JPY trades within the ascending trend channel. The Bull Cross between the 50- and 100-hour Exponential Moving Averages (EMA) also highlights that the path of least resistance for the pair is to the upside.

The immediate resistance emerges at 139.70 (daily high of July 20). Any meaningful follow-through buying could pave the way to the next hurdle at 140.00, a confluence of a psychological round mark and a weekly high of July 6. The additional upside filter to watch is at 145.50 (High of July 3, the upper boundary of the ascending trend channel).

On the other hand, the critical support level to watch is at 139.00, a psychological round mark and a high of July 18. A decisive break below the latter will see a drop to 138.70, the lower limit of the ascending trend channel. The next levels of contention for USD/JPY is seen at 138.15 (Low of July 17) en route to 137.70 (Low of July 18).

The Relative Strength Index (RSI) stands below 50, indicating further downside cannot be ruled out.

USD/JPY one-hour chart