Don’t look now, but there are some technical reasons to believe that U.S. Treasury Secretary Scott Bessent was right when he declared to the financial markets that “I am the house now.”
Not only has the upside momentum apparently swung to the Japanese yen , and away from its U.S. dollar counterpart, but a chart pattern ominously known as a “death cross” is developing — it’s likely to be confirmed early next week — that suggests the rapid uptrend in the dollar-yen rate, which threatened Japan’s economy and is unwanted by the Trump administration, may have actually reversed.
Death crosses aren’t necessarily good market-timing signals, but they help reinforce the idea that a new trend may have started. “We like to say that every major downside move starts with a death cross, but not every death cross leads to a major decline,” wrote Ari Wald, head of technical analysis at Oppenheimer & Co., in emailed comments to MarketWatch.
On Friday, the dollar-yen rate dropped 1% in afternoon trading toward its biggest one-day decline in three weeks — with Bessent posting on X about President Trump’s endorsement of the “desirability of a strong yen,” which the Bank of Japan has been pushing for. The selloff came at the right time on the charts to provide further evidence that the 17-month-long uptrend may have been broken. As the yen strengthens against the dollar, the dollar-yen rate declines.
Photo: FactSet, MarketWatch
When the government tells investors to stop buying something, there can be an almost defiant interest to do just the opposite, as it can suggest the powers that be have reason to believe the rally will continue unless they intervene directly in the market to stop it.
And history is littered with examples of when government intervention has failed, even spectacularly, to stop the markets — such as the collapse of the British pound in 1992 and the Asian financial crisis of the late 1990s, as well as Bessent’s recent attempts to slow the rise in longer-term Treasury yields.
So when the U.S. Treasury collaborated with the Bank of Japan to halt the continued climb in the dollar-yen exchange rate in late July, many believed that while the rate might fall initially, the fundamentals that brought it to that level would kick back in and the price would soon resume its path.
But after a brief bout of strength, the currency pair broke on Sept. 3 below a trend line that tracked the rally off the April 2025 lows. Buyers once again stepped in and the rate rose back up to test the trend line, to see if it was really broken. Friday’s selloff confirmed that it was.
Photo: FactSet, MarketWatch
And the selloff comes right after dollar-yen rate tried to get back above the 200-day moving average, which many chart watchers view as a dividing line between longer-term uptrends and downtrends.
“Today’s failure at the 200-day moving average leaves the [currency] pair vulnerable to a test of 152 support, near the 2026 lows,” Wald wrote.
Next comes the death cross.
Photo: FactSet, MarketWatch
That pattern appears when the 50-day moving average, a widely followed short-term trend tracker, crosses below the 200-DMA. That is seen as marking the spot where a shorter-term decline graduates to a longer-term downtrend.
Based on the current trajectories of dollar-yen’s 50-DMA and 200-DMA, the crossover should occur before the end of next week. That would mark the first death cross for the currency pair since March 25, 2025.
After that appearance, prices fell another 6% before bottoming about a month later.
But the death cross before that had appeared on Sept. 9, 2024, and prices bottomed a week later after just another 1.8% decline.
Still, Oppenheimer’s Wald believes that in the current technical setup, the death cross “aligns with a broad loss of momentum,” and it “strengthens the case for a trend reversal.”
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