China’s Xi speaks with Trump by phone, discusses Taiwan and bilateral ties
The USD/JPY is testing a critical resistance zone near 155.00, with momentum indicators signalling potential continuation of the bullish trend. As traders weigh diverging monetary policies between the Federal Reserve and the Bank of Japan, the yen remains under pressure — and the next move could set the tone for the rest of Q4.
Technical Outlook: Bulls in Control
The USD/JPY daily chart shows that the pair has been consolidating near recent highs after rebounding sharply from the 140 area earlier this year. The latest candle closes near 154.24, keeping the uptrend firmly intact.
- The 15-day and 20-day moving averages are in a bullish crossover formation, confirming short-term momentum remains positive.
- The Relative Strength Index (RSI) currently sits around 62.7, showing steady buying pressure but still below overbought levels — leaving room for further upside.
- Price action remains above both moving averages, suggesting trend continuation rather than exhaustion.
This setup typically precedes another leg higher in established uptrends, especially when backed by strong macro fundamentals.
Macro Drivers: U.S. Yields Up, Yen Confidence Down
Dollar strength continues to draw support from persistent expectations that the Federal Reserve will maintain higher-for-longer interest rates, while the Bank of Japan remains hesitant to tighten aggressively.
This divergence in yield outlook keeps carry trade demand elevated — traders borrow yen at low rates to invest in higher-yielding U.S. assets, fuelling the pair’s upside momentum.
The key question now is whether the BoJ will step in to defend the yen if it breaks above the 155 level, as it has hinted at potential intervention in the past.
Key Technical Levels to Watch
|
Level |
Significance |
|
155.00 |
Psychological barrier & breakout trigger |
|
156.50–158.00 |
Next bullish targets if breakout confirmed |
|
153.00 |
Immediate support (moving average cluster) |
|
150.50 |
Deeper support, invalidation level for bulls |
A daily close above 155.00 could ignite a technical breakout, paving the way toward 156.50 and possibly 158.00.
Conversely, a failure to hold 153.00 would shift focus back toward 150.50, where a deeper correction could begin.
Sentiment Check: Traders Turning Aggressively Long
Market sentiment is tilting decisively bullish, with speculative positioning showing increased long exposure in USD/JPY.
Retail traders, however, remain cautious — suggesting that the current rally could still have fuel left before euphoria kicks in.
Takeaway
The pair is sitting at a make-or-break zone. Technicals favour the bulls, fundamentals back the dollar, and sentiment is slowly aligning for a push higher.
If 155 breaks cleanly, expect momentum traders to jump in — and the yen could slide fast.
However, if Japan’s Ministry of Finance intervenes or the pair fails to hold above its short-term averages, the long side could unwind quickly.
Either way, volatility is coming — and the next few sessions could define the trend for the rest of 2025.
