The USD/JPY pair exhibits some indecision following an initial surge, yet the prevailing support levels and yield differentials remain advantageous for the dollar. Carry trade dynamics and structural Japanese policy constraints indicate that pullbacks continue to present favorable buying opportunities. The US dollar initially attempted to strengthen against the Japanese yen but subsequently reversed, indicating a lack of conviction in the upward momentum. The 155 yen level appears to be attempting to provide some support, and consequently, I believe this may present a minor buying opportunity.
For USD/JPY, it is evident that numerous inquiries are currently surrounding the Federal Reserve and the forthcoming developments. At this juncture, it is clear that the interest rate differential will persist in favoring the US dollar. Consequently, in the long run, this should support an upward movement for this pair. Should we experience a downturn from this point, the 50-day EMA is positioned around 154 yen, providing a support level, followed closely by another at 152 yen.
In the context of USD/JPY, it seems probable that we may see a slight pullback; however, this could ultimately present a favorable buying opportunity. That will be particularly relevant as we approach the Bank of Japan’s announcement later this week. Consequently, I believe that some degree of erratic sideways volatility is quite logical. However, as I have consistently stated over the past few months, I have maintained my position in this pair, and I receive daily compensation for maintaining this position.
The USD/JPY carry trade exemplifies significant financial leverage and is anticipated to gain significant traction once more, particularly if the United States adopts a more hawkish stance than previously anticipated. Most of the leading economic indicators in the United States indicate that 2026 could potentially be a favorable year for the US economy. Considering this, along with the structural challenges Japan faces in effectively tightening monetary policy, I believe these dips present ongoing buying opportunities for those who are patient, while even short-term traders are seizing this opportunity.