Insights 
VT 
USD/JPY TECHNICAL ANALYSIS
USD/JPY’s upward trend continues, moving past the 148.00 level to near 152.00, surpassing the 50-day and 200-day moving averages. The recent decline appears temporary, maintaining support around 151.00, with possible further advances to 153.00.
Japanese Yen’s value is influenced by the Japanese economy’s performance, Bank of Japan policies, bond yield differentials, and global risk sentiment. The Bank of Japan’s policy changes, particularly since 2013, have contributed to the Yen’s depreciation against major currencies.
Investors often view the Japanese Yen as a safe haven, potentially boosting its value during market stress. Instability tends to increase demand for the Yen due to its perceived stability.
USDJPY SIGNALS AND STRATEGIES
The USD/JPY pair is showing near-term strength after rebounding above the 152.00 level. The clean break above the 200-day moving average last week confirms the bullish momentum is still in play. Traders are watching to see if the pair can hold above the 151.00 support zone for another push toward 153.00.
This upward trend faces a major challenge from the Federal Reserve’s expected policy path. We see that current market pricing, reflected in Fed funds futures, shows an 85% probability of another quarter-point interest rate cut in November 2025. This expectation for lower US rates is putting a ceiling on how high the US dollar can climb.
Meanwhile, the Bank of Japan’s gradual policy normalization, which began in 2024, continues to provide underlying support for the yen. This policy divergence is shrinking the yield gap between US and Japanese bonds, with the 10-year spread having tightened by nearly 100 basis points over the past year. This fundamental shift makes holding yen more attractive.
Adding to the uncertainty, the ongoing US government shutdown is delaying the release of key economic data, including this week’s Producer Price Index. This forces us to trade on headlines and sentiment, especially with renewed US-China trade war rhetoric in the background. In such an environment, the yen’s safe-haven status could trigger a sharp reversal on any negative news.
For derivative traders, this conflict between bullish technicals and bearish fundamentals suggests buying volatility. One-month implied volatility for USD/JPY is hovering near a modest 9.5%, making long straddles or strangles an effective way to position for a significant breakout. This allows a trader to profit from a large move in either direction without having to predict its timing perfectly.
Alternatively, for those leaning toward yen strength, put spreads offer a cost-effective strategy. Buying a put option at the 151.00 strike while selling one at a lower strike like 149.00 creates a defined-risk position. This approach will benefit if the pair breaks down from its current highs amid rising market stress.
