Insights 
VT 
USD/JPY sees a decrease as the Yen gains strength following hawkish comments from BoJ Governor Ueda. Markets anticipate a December BoJ rate hike, while a Fed rate cut is expected next week. Despite a bullish technical structure, momentum indicators suggest slowing.
Currently, USD/JPY is stabilising around 155.40 after an earlier decline. BoJ’s Ueda indicated consideration of a rate increase at the December meeting, cautioning against delaying actions which may prompt sharp inflation. Meanwhile, expectations in the US remain firm for a Federal Reserve rate cut in December.
Technical Analysis Maintains Bullish Outlook
The technical analysis shows USD/JPY maintains an uptrend on the daily chart with higher highs and lows. Support remains above 154.50, keeping the bullish structure intact; the pair’s price is above both the 50-day and 100-day Simple Moving Averages.
Momentum indicators like the MACD are turning down, with the RSI easing to a neutral 54. A break below 154.50 could lead to testing 152.69 support, with the 100-day SMA providing potential support at 150.20. On the upside, resistance at 156.00 could limit recovery, but surpassing this might lead to a higher high near 158.00.
Currently, the Japanese Yen is the strongest against the British Pound, reflecting various currency movements.
Significant Uncertainty Due to Policy Clashes
The long-term uptrend in USD/JPY is strong, but we see a major test coming in the next few weeks. The Federal Reserve is expected to cut interest rates next week, while the Bank of Japan is hinting at a rate hike the week after. This policy clash creates significant uncertainty and is the main focus for traders right now.
The case for a Fed rate cut at the December 9-10 meeting is getting stronger. We’ve seen recent data showing US core inflation for October 2025 fell to 2.5%, and the latest jobs report indicated the slowest payroll growth in over a year. The CME FedWatch Tool now shows markets are pricing in a 92% probability of a quarter-point cut, suggesting a weaker dollar ahead.
Meanwhile, the Bank of Japan is facing pressure to tighten its policy at its December 18-19 meeting. Japan’s national inflation has now remained above the bank’s 2% target for over 18 consecutive months, hitting 2.8% in the latest reading. Governor Ueda’s comments about acting before inflation gets out of control are being taken very seriously.
We are watching for a potential reversal of the major trend that dominated the 2022-2024 period. Back then, the Fed’s aggressive rate hikes against a stationary BoJ sent the USD/JPY soaring to multi-decade highs. Now, we could be at the very beginning of the opposite scenario, which could trigger a significant correction.
Given the high event risk from both central banks, we should consider using options to trade the expected spike in volatility. Buying a straddle, which involves purchasing both a call and a put option at the same strike price, could be a good strategy. This would allow a trader to profit from a large price swing in either direction following the meetings.
For those leaning bearish on the pair, buying put options offers a way to bet on a decline while clearly defining risk. A break below the key 154.50 support level could be a trigger to enter such positions. This approach limits potential losses to the premium paid for the option, which is crucial if the long-term uptrend unexpectedly resumes.
The technical levels are clear triggers for action in the coming weeks. We are watching the 154.50 support line closely, as a firm break below it could open the door to the 152.70 area. On the other hand, if buyers defend this level and push the price back above 156.00, it would signal that the bullish trend is still intact.
