USD/JPY Price Structure: From 139.87 Reset Back Toward 158.80
The USD/JPY structure is back in clear upside mode after the correction from the 161.94 high washed out to 139.87 and stalled. That three-wave drop down to 139.87 looks completed, and the pair has now pushed back through 157.88, extending the recovery leg that started from the 142.66–145.47 region. The current swing is working toward a Fibonacci projection at 158.80, defined as the 161.8% extension of the 142.66 → 150.90 rally measured from 145.47. As long as price holds above the near-term support band around 156.10, the market is treating this as a trend continuation phase rather than a topping pattern. A sustained break of 158.80 opens the way to the 200% projection near 161.95, essentially a retest of the 161.94 peak. The message from price is straightforward: the correction from 161.94 to 139.87 is likely over, and the larger uptrend from 102.58 is trying to reassert itself through the 158–162 zone.
Multi-Timeframe Trend: Long-Term Uptrend From 75.56 And 102.58 Still Favors Dollar Strength
On the higher timeframes, USD/JPY is still riding a secular bull market that began at 75.56 in 2011 and was reinforced by the 102.58 low in 2020. The advance off 102.58 into 161.94 created a powerful primary up leg. The subsequent drop to 139.87 fits as a corrective phase within that bigger structure, not a full trend reversal. If the market pushes decisively through 158.85–161.94, the technical roadmap starts pointing to the next major projection zone near 176.55, calculated as the 61.8% extension of the 102.58 → 161.94 move, measured from 139.87. That level is a medium-term concept rather than an immediate target, but it explains why dip-buyers have been so aggressive above 140 and why every pullback toward the mid-150s is being treated as opportunity rather than danger. From a structural point of view, the bullish thesis only starts to erode if USD/JPY breaks back below the 154.38–154.30 region and turns the recent range into another leg of a wider consolidation instead of a launchpad.
USD/JPY And NFP: Four-Day Dollar Run As Labor Data Keeps Fed In “Hold” Mode
The latest U.S. jobs report reinforced the dollar side of USD/JPY. Non-farm payrolls for December printed around 50,000, softer than the 66,000 consensus, but not weak enough to signal acute labor stress or force immediate rate cuts. The market read this as “slower but still functional” employment rather than the start of a recessionary slide. Rate expectations adjusted accordingly. The probability of the Federal Reserve holding rates unchanged at the January 28 meeting is now above 95%, and the odds of no move in March stand near 70.9%, with April still showing a majority leaning toward a neutral stance rather than rapid easing. That repricing has pushed the dollar higher against the yen, driving a four-session winning streak in USD/JPY and a short-term gain of more than 1%, with spot back above 157. The DXY index has climbed above 99 and is probing the psychological 100 area, confirming that flows are rotating back toward U.S. assets rather than away from them. For USD/JPY, this combination—labor that is cooling but not collapsing and a central bank comfortable staying on hold—keeps the interest-rate spread firmly in favor of the dollar.
Rate Differentials And DXY: Why The Dollar Leg Of USD/JPY Still Has The Initiative
The backdrop across U.S. macro data continues to justify higher-for-longer expectations. A prior 6.4% monthly rebound in building permits, after a −3.7% reading, hinted early that the housing slowdown was stabilizing instead of spiraling. Real activity data into late 2025 then confirmed that the economy had more momentum than bears were pricing, with growth revised up to around 4.3% annualized in Q3 against earlier expectations near 3.3%. That kind of upside revision makes it difficult for the Fed to pivot quickly into a cutting cycle. Markets have already shifted from aggressively discounting multiple early cuts to pushing the first meaningful easing risk into mid-year, and even that is conditional on inflation and jobs weakening more than they have so far. This adjustment is visible in DXY trading: the index bounced from the mid-90s, completed a double-bottom-type structure, and is now defending the 99 neckline. A clean hold above that zone would open 100.40, then 102–104.60. Every incremental leg higher in the dollar index mechanically supports USD/JPY, especially while the yen remains anchored by a much softer domestic rate profile.
Bank Of Japan, Yield Gap And The Fundamental Pressure On The Yen
On the yen side of USD/JPY, the story is still dominated by a central bank that has not fully stepped away from ultra-easy policy. The Bank of Japan has flirted with normalization signals but continues to sit in a data-dependent posture, alternating between mildly hawkish hints and neutral language. Markets know that any tightening will be slow, limited and conditional, while the Fed, even at the peak, is still delivering a real policy rate that sits far above Japan’s. That yield gap continues to attract carry trades into USD/JPY, especially when the global tone is risk-on and demand for safe-haven yen is subdued. The pricing pattern reflects this: every time spot drops toward the mid-150s, buyers step in ahead of support around 155–154.80 and again near 154.30. With Japanese government bond yields constrained and domestic inflation expectations still much lower than in the U.S., the yen remains structurally disadvantaged. That is why the pair can trade near one-year highs even when U.S. data is merely “okay” instead of spectacular.
Technical Map For USD/JPY: 158.80 And 161.95 Above, 156.00 And 154.30 Below
The short- and medium-term technicals on USD/JPY are aligned with this macro bias. On a multi-day chart, price is riding an aggressive uptrend that began around 139.80 in April 2025, with successive higher highs between May and November and a support band defined in the 155–154.80 zone. On the weekly view, last week’s breakout through 157.88 resumed the climb from 139.87 and keeps the focus on the 158.80 projection, which is the 161.8% extension of the 142.66 → 150.90 leg. Above 158.80, the next key cluster sits at 161.95, aligning both a 200% projection and the prior 161.94 peak that capped the 2024 run. Oscillators support a bullish interpretation but also warn that the market is running hot. The RSI is edging higher above the 50 line and moving toward overbought territory near 70, signaling persistent buying pressure but also the risk of sharp corrective swings once positioning saturates. The MACD histogram is expanding above zero, showing trend momentum still on the upside. The tactical line in the sand on the downside is around 156.00–156.10, where short-term moving averages and trend support converge. A pullback that holds above that area is simply a dip in an uptrend. A break under 156.00 exposes 155.78 and then the broader 155–154.80 cradle. Only a daily close through roughly 154.30–154.38 starts to damage the bullish structure, opening 153, 151.80 and, in a deeper washout, the 150 handle. Until that happens, the market is rewarding traders who buy weakness rather than those who fade strength.
Macro Cross-Asset Signals: Nikkei 225 Strength, Gold Above $4,500 And Crypto Under Pressure
The environment around USD/JPY is being reinforced by cross-asset behavior. Japanese equities remain strong: the Nikkei 225 has surged to new record highs after a 2025 performance of around 25%, marking a third consecutive year of gains above 20%. From the 2008 low, the index is up more than 13,000%, and although momentum gauges show some fatigue and some heavyweight names like SoftBank and Sony are wobbling, the primary trend is still bullish. It is difficult for the yen to attract haven flows when domestic equities are printing all-time highs and the largest financial institutions such as MUFG are in solid uptrends. At the same time, gold has broken above $4,500 and is tracking a roughly 4% weekly gain even as the dollar strengthens, a rare combination that speaks to global hedging demand against geopolitical risk and policy uncertainty rather than dollar weakness. That tells you investors are not rotating out of dollars to buy protection; they are buying both the dollar and hedges, which is consistent with USD/JPY resilience. In digital assets, Bitcoin is pinned around $90,000 but below its 50-day EMA, and Ethereum sits just above $3,000 while ETF products linked to it have seen more than $500 million in outflows since late 2025. Capital is not abandoning the dollar to chase crypto; it is gravitating back toward U.S. yields and away from non-yielding risk. That flow mix supports the dollar leg of USD/JPY and leaves the yen with very little organic support outside of occasional risk-off spikes.
Geopolitics, Tariffs And Event Risk For USD/JPY Volatility
Geopolitics are present but not yet decisive for USD/JPY direction. Tensions involving Venezuela and Greenland, and the possibility of more aggressive U.S. moves around oil and strategic assets, have generated headlines but not sustained risk aversion. Equities, credit and carry trades have all weathered the noise without any meaningful rush into the yen. Markets are treating these flashpoints as localized and manageable rather than systemic. The more important event risk in the near term remains U.S. data and central-bank guidance: the next CPI print, further labor indicators and any surprise shift in Fed rhetoric. On the Japanese side, any concrete step from the Bank of Japan toward ending negative real rates or tightening in a non-symbolic way would be a genuine shock for USD/JPY, because it would compress the yield gap the pair has been trading on since 2021. Until such a pivot appears, geopolitical scares are more likely to generate short-lived dips than durable reversals, with buyers waiting near 156 and then 155 to reload.
Trading View On USD/JPY: Bias Bullish, Classified As Buy With Risk Below 154.30
Putting the pieces together, USD/JPY is in a bullish phase, supported by a completed correction from 161.94 to 139.87, a fresh break above 157.88, a projection path toward 158.80 and potentially 161.95, a Fed that is priced to hold rates through the first quarter with more than 95% probability in January, and a Bank of Japan that is still far from delivering a decisive tightening cycle. The DXY rebound above 99, resilient U.S. macro data such as a 4.3% annualized Q3 growth rate and recovering building permits, record-high Japanese equities and capital rotation out of non-yielding assets all point in the same direction. From a trading classification point of view, that setup is bullish and aligns with a Buy stance on USD/JPY, with preference for buying pullbacks rather than chasing every spike. The tactical plan that fits the current map is to treat dips toward 156.00–156.10 as the primary entry zone, with a secondary accumulation band around 155–154.80 if volatility extends. As long as price holds above roughly 154.30–154.38 on a closing basis, the dominant scenario favors a test of 158.80 and, if momentum persists and macro data stay dollar-positive, an eventual retest of the 161.94–161.95 region. A decisive break below 154.30 would invalidate that stance and shift the classification toward Hold or even Sell, targeting 153, 151.80 and 150 in a broader corrective phase. With the information on the table now, the weight of evidence supports a bullish view and a Buy rating on USD/JPY, with clearly defined downside levels that separate trend continuation from genuine reversal.
That's TradingNEWS
