USD/JPY fell for a third straight day as the Yen stayed supported after Japan’s election result. The pair traded near 152.84, close to a two-week low, and is down more than 2.5% this week.
The Yen gained support after Prime Minister Sanae Takaichi’s election win, which eased political uncertainty. The US Dollar also struggled to hold gains even after a strong US jobs report. The Dollar Index hovered near 96.75 after a brief jump to 97.27.
Bearish Technical Setup
The technical picture has turned bearish after USD/JPY dropped below key daily moving averages. RSI is near 35, and Average True Range (14) is about 1.38.
A break below 152.00 could put the 200-day SMA near 150.50 in focus. A move under 150.00 could open the door to 148.00, the 1.618 Fibonacci level.
On a bounce, 153.69 (78.6% retracement) and 154.84 (61.8% retracement) are key levels. The 100-day SMA is around 154.60. A daily close above 154.84 could shift attention to the 50-day SMA at 156.27.
The Yen is influenced by Japan’s economy, Bank of Japan policy, Japan–US yield spreads, and overall risk sentiment. The BoJ ran an ultra-loose policy from 2013 to 2024, then started moving away from it in 2024.
USDJPY Downside Strategy
With the Yen stronger after the election, the focus should be on strategies that benefit if USD/JPY falls. The new government looks stable, which points to a clearer and more predictable policy outlook. Markets appear to welcome this, and it marks a clear change from the uncertainty seen through much of 2025.
The US Dollar’s failure to rally on strong jobs data supports the view that the Federal Reserve’s dovish stance is still the main driver. Last week’s January US CPI came in at 2.8%, below expectations. This raised the odds of a mid-year rate cut, with futures now pricing the probability at over 70%. This differs from the Bank of Japan, which is expected to keep slowly unwinding the loose policy of the past decade.
For derivatives, this setup favors buying USD/JPY put options. With the pair now below key moving averages, there is room for a move toward the 200-day SMA near 150.50 in the coming weeks. Puts with a 152.00 strike look like a primary way to position for the downtrend.
In late 2024, Ministry of Finance intervention helped push the Yen stronger. This move looks different because it is supported by a shift in fundamentals, with policy paths starting to converge. Wider daily swings also suggest put spreads may be a better choice. They can reduce the cost of higher option premiums while still keeping downside exposure.
Discipline is key, and the resistance levels above should be watched closely. A daily close back above 154.84 would suggest bearish momentum is weakening and would require a reassessment of short positions. Until then, the simplest path still appears lower for the pair.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
