The USD/JPY pair continues its upward trend, reaching 155.04 yesterday — its highest level since February 4, 2025. The pair has risen by 6% from the low recorded on September 17, 2025, at 145.48, up to yesterday’s peak of 155.04. However, it remains down by about 2% year-to-date and is currently trading near the 155.00 level. Expectations suggest that the pair will likely maintain its upward trend in the coming period.
The main factors weighing on the Japanese yen are:
• The continued yield gap between Japanese and US government bonds. For instance, the 10-year Japanese government bond yield is around 1.693%, while the 10-year US Treasury yield is about 4.077%. This means the spread between them is approximately 2.384%, encouraging carry trade activity.
• Political uncertainty in Japan. Sanae Takaichi, the leader of the Liberal Democratic Party and Prime Minister of Japan, is known for supporting expansionary fiscal and monetary policies that promote high government spending and easy borrowing to revive the sluggish economy. This stance complicates the Bank of Japan’s efforts to control inflation without raising interest rates.
• US monetary policy. Although markets have priced in a 50% probability of a 25-basis-point rate cut at the Federal Reserve meeting on December 10, uncertainty remains over the Fed’s next moves amid sharp divisions among its members. For example, Mary Daly emphasizes the need to keep monitoring inflation risks, while Steven Miran advocates for a 50-basis-point rate cut at the next meeting. Additionally, Fed Chair Jerome Powell adopted a cautious tone, ruling out the certainty of a rate cut in the upcoming meeting. Markets are also closely watching the release of the nonfarm payrolls report for September and October, which is expected later, after the end of the US government shutdown. During the shutdown, no key economic data — especially labor market reports — were released. This upcoming report is expected to directly influence the Fed’s policy direction and, consequently, global market movements.
From a technical perspective, the bullish trend in USD/JPY appears dominant in the near term. The key challenge lies in reaching the resistance level of 158.87 — the high recorded on January 10, 2025 — and then the psychological level of 160.00.
In addition, a bullish or “golden” crossover has been observed between the 20-day and 50-day moving averages. More importantly, there is a positive alignment across the 20-, 50-, and 200-day moving averages, with the 20-day average above the 50-day, and the 50-day above the 200-day, indicating a medium-term bullish trend for the pair.
If the pivot point at 154. 63 is broken, the pair may target support levels at 154.20, 153.62, and 153.19. Conversely, if it rises above the pivot point, potential resistance levels are seen at 155.21, 155.64, and 1596.22. The Relative Strength Index (RSI) is currently at around 66, reflecting bullish momentum for the USD/JPY pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
