The US Dollar (USD) is gradually gaining strength against the Japanese Yen (JPY) and is nearing the 154.50 mark. However, it’s unlikely to break through this level in the short term. Analysts Quek Ser Leang and Peter Chia from UOB Group suggest that if momentum continues to build, the USD could reach 154.90. In the last 24 hours, the USD hit a high of 154.44 and traded between 153.63 and 154.41, closing at 154.00, which is a slight drop of 0.08%. We currently see support levels at 153.90 and 153.65, with expectations that the USD may test the 154.50 level without going beyond it.

Market Insights Analysis

In the past week, momentum hasn’t increased since last Thursday’s jump. However, if the 153.00 support level holds, there’s still a chance to reach 154.90. This analysis comes from FXStreet’s market insights, based on observations from respected market experts and their team. The information is general and not intended as a recommendation to buy or sell. The USD/JPY pair shows steady but limited upward movement, which presents an opportunity for traders to sell short-dated call options. By setting strike prices around 154.50, traders can profit from the assumption that a considerable breakout is unlikely this week. This strategy benefits from the price staying below that resistance point. This cautious perspective is supported by recent US data: the ISM Manufacturing PMI for October was 48.7, indicating a contraction and weakening the dollar. Additionally, the latest US jobs report revealed that non-farm payrolls added only 150,000 jobs, slightly below expectations, which lessens the likelihood of aggressive actions from the Federal Reserve. This economic backdrop suggests that the dollar may enter a phase of consolidation after its strong rise.

Trading Strategies and Risks

On the downside, the 153.00 level is seen as strong support, acting as a safety net for traders in the near term. For those trading within this range, selling put options with strikes below 153.00 can be a valid strategy to make income. If this support holds, these positions can benefit from time decay and the pair’s inability to drop. It’s important to watch for any comments or actions from Japanese authorities, especially since we are trading in a sensitive area that triggered significant market reactions last fall in 2024. The large interest rate gap between the Federal Reserve and the Bank of Japan continues to influence the market, but history shows the Ministry of Finance can intervene unexpectedly to curb yen weakness. This ongoing risk makes holding large long positions challenging without a solid exit plan. Create your live VT Markets account and start trading now.

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