The US dollar showed fluctuations against the Japanese yen during trading, with USD/JPY indicating a challenge in gaining any definitive momentum. The US dollar demonstrated fluctuations against the Japanese yen during trading on Tuesday, with USD/JPY indicating challenges in gaining definitive momentum. In the near term, it appears improbable that we will witness substantial movement, as apprehensions regarding the holiday season and liquidity limitations will overshadow other considerations.
All things being equal, USD/JPY is likely to maintain a focus on the 50-day EMA below, currently positioned just beneath the 155 yen level. The area in question serves as short-term support for USD/JPY, while the 158 yen level above functions as resistance. I do not foresee any major changes in the immediate future; however, it is evident that we will eventually have to progress beyond this range. Should USD/JPY exceed the 158 yen threshold, I am confident that the dollar will ascend to the 160 yen mark. A decline beneath the 154.50 yen threshold sets the stage for a possible drop to the 153 yen level.
From a fundamental standpoint, the Bank of Japan has indeed raised rates, whereas the Federal Reserve is expected to execute one or two cuts in 2026. Nonetheless, the existing interest rate differential remains significant, enabling considerable fluctuations in USD/JPY, and the Bank of Japan does not possess the ability to markedly tighten its monetary policy.
Emerging discussions are taking place concerning Japan’s potential tightening measures. However, given the country’s demographics and considerable debt burden, it is improbable that this will evolve into a notable trend in the foreseeable future. The approach of buying during dips in USD/JPY against the yen is attractive to me, and I will continue to implement it.