It is anticipated that the most probable scenario for USD/JPY, at least in the upcoming weeks, could involve a sideways movement as the pair establishes a range of approximately 350 pips. The US dollar has experienced a decline against the Japanese yen in early trading on Wednesday; however, USD/JPY is beginning to show some signs of resistance. The 155-yen level is likely to attract significant attention in USD/JPY, as it may serve as a potential support area, particularly with the 50-day EMA positioned just beneath it. Considering all factors, this represents a period of consolidation for USD/JPY; however, it also reflects a pricing level that has not been observed since early 2025.
So, the inquiry at hand is whether USD/JPY is encountering a ceiling. It may be premature to propose that currently, yet it remains a potential scenario that I will monitor closely. The 158-yen level represents a notable resistance point for USD/JPY, while the 155-yen region serves as a substantial support level. The 50-day EMA is a widely observed indicator, currently positioned at 154.50 yen, which aligns well with the overall USD/JPY technical structure.
The Japanese yen experienced some volatility following the Bank of Japan’s rate hike last week. However, it appears that the broader market may not favor this move, potentially leading to repercussions for Japan and limiting sustained yen strength against USD/JPY. The market appears skeptical about the likelihood of Japan implementing aggressive rate hikes in the near future. In contrast, the Federal Reserve might contend that recent data indicates a need for a cautious approach in their rate-cutting strategy, which continues to support USD/JPY on dips.
Considering all factors, USD/JPY remains quite volatile at the moment; however, I am confident that it will ultimately trend upward. Even if it does not, I would consider a reset around the 152-yen level and begin to identify support in that area, as the 200-day EMA is situated nearby, providing an important medium-term reference point for USD/JPY.