Selling USDJPY with 158.500 in mind amid rising inflation risks

According to the daily chart, USDJPY’s rally is losing steam near the key resistance level of 160.790. Following a robust recovery from the May low, the pair has recently jumped back to its two-year highs. However, reduced volatility and weakening buying momentum could complicate any further upside.

Previous trading sessions showed a V-shaped reversal after USDJPY’s fall on April 30, when prices plummeted from 160.719 to 155.027. A subsequent series of bullish candles pushed the pair back above 160.000 and allowed it to touch its latest peak. The rally, however, was undermined by lower volatility. The Average True Range (ATR) indicator, which reached 1.624 when panic hit, dropped to 0.595 by June 18. This could signal that the growth phase is over, and the pair is entering a consolidation period.

The Chaikin Oscillator also points to a slowdown in the current rally, though it remains positive. The indicator’s lines are gradually turning lower, reflecting fading bullish momentum—a pattern typical of the uptrend’s later stages.

The Relative Vigor Index (RVI) is singing the same tune, suggesting that buyers lack the strength to break through resistance. So, these technicals tell a similar story: the upside is still intact but weaker, while the probability of a short-lived correction is growing.

The fundamental picture does not promise USDJPY a long-lasting rally. The Federal Reserve’s (Fed) hawkish rhetoric and rising expectations of a future rate hike are undoubtedly favorable for the dollar, but the risk of currency interventions by the Japanese government is becoming more acute. The pair is now approaching critical levels, at which the Ministry of Finance has historically stepped in to support the yen. Moreover, the country’s authorities have already stated their willingness to act if necessary. Under these circumstances, the upside appears limited. The same cannot be said for the chances of a corrective pullback from 160.790.

Try out the following trading strategy:

Sell USDJPY from 160.600–160.800. Place Take profit at 158.500 and Stop loss at 162.000.

This forecast remains pertinent between June 18 and June 25, 2026.