The USDJPY pair is taking a step back this week, once again repelled by the stubborn 158 resistance level. The daily chart is forming what appears to be a triple top, though its middle peak slightly deviates from the perfect pattern. Nevertheless, the current selloff could easily extend to 154.5, giving sellers a prime chance to lock in their gains on short positions.
On the momentum front, the Stochastic Indicator is pointing lower, supporting more downside, while the RSI is parked at neutral, leaving enough room for bulls and bears to run. If the triple top is confirmed, the next logical step would be a break below the 154.5 support toward the August-September zone, which is around 146–149. However, this kind of slide would quickly meet the 50-day moving average and the lower Bollinger band—two layers of backing that are likely to block any decline before year-end. Sellers would be wise to set their sights on 154.5 and call it a win.
Contrary to widespread expectations, the Bank of Japan's December 19 decision to hike interest rates to 0.75%—a three-decade high—did little to light a fire under the yen. Markets were hoping for a clear roadmap to further tightening in 2026, yet Governor Kazuo Ueda and his team stayed conspicuously vague. This left the national currency teetering near its annual low and pushed Japanese authorities toward a response.
This week, Finance Minister Satsuki Katayama fired a warning shot, stating that the yen's exchange rate "does not reflect the country's economic fundamentals at all." Such a statement is widely seen as a prelude to intervention if weakness persists. With that threat hanging in the air, traders are losing their appetite for long USDJPY bets near the aforementioned highs. Bank of America (BofA) analysts caution that direct yen-buying could begin shortly after the holiday lull.
The following strategy may come into play for your trading:
Sell USDJPY in the 156–157 range. Place Take profit at 154.5. Set Stop loss at 158.
This content is for informational purposes only and is not intended to be investing advice.
