USDJPY sell-off targets 156.50 amid weakening upward momentum

As of May 21, 2026, the USDJPY pair is trading near 159, forming an ascending triangle on the daily chart. Prices are trapped between a rising trendline support at 156.38 and a horizontal resistance at 160.45. However, signs of waning bullish momentum are becoming increasingly evident.

The Stochastic Oscillator (%K=82, %D=87) points to a bearish divergence, with its lines crossing from top to bottom. What does this mean? Buying interest is fading, and a short-term correction is likely. Before making another decisive move, the market needs to take a breather. Thus, the most probable scenario in the medium term is a pullback toward the ascending triangle's support line.

The Chaikin Oscillator tells the same story. The indicator remains in positive territory, suggesting that bulls are still in the driver’s seat. That said, it has been moving downward since May 15—a textbook example of price-volume divergence. In other words, quotes keep clinging to local peaks, while buying interest diminishes.

The fundamental picture aligns with the technicals, pointing to trouble ahead for the dollar. The Bank of Japan’s (BoJ) policy stance is growing more hawkish each day. There is an 80% likelihood of a rate hike at the June meeting. Progress in the US-Iran peace talks has recently reduced the greenback's appeal as a safe haven. On top of that, Japanese authorities have repeatedly voiced their willingness to intervene and support the national currency once USDJPY approaches 160, setting a firm ceiling for the pair. Taken together, this monetary and geopolitical context provides strong fundamental justification for a correction.

Try out the following trading strategy:

Sell USDJPY at current levels, with Take profit at 156.50 and Stop loss at 160.80.

The forecast remains relevant between May 21 and May 28, 2026.