The USD/JPY pair is showing more momentum, which hints at possible gains ahead. But right now, resistance at 157.50 is still too strong, and the USD ended at 156.81, up by 0.10%, with support at 156.75. In the weeks to come, the USD might see slight upward pressure and could move higher to test 157.50. While breaking above this level isn’t ruled out, the current momentum makes it unlikely to exceed last month’s peak of 157.80. A solid support level is found at 156.35.

FXStreet Insights

FXStreet Insights shares market observations from different analysts. Topics include how geopolitical events affect currency rates and economic data releases. These insights feature expert analysis but do not provide specific investment advice. Additional content on FXStreet examines movements in other currency pairs and assets. Topics cover geopolitical events that impact markets as well as analyses of precious metals and cryptocurrency trends. However, this information is for general knowledge and does not guarantee any investment outcomes. Currently, the US Dollar shows mild upward pressure against the Yen, though resistance at 157.50 holds strong. Despite the momentum leaning towards some advances, significant breakouts seem unlikely in the near term. Watch for support around the 156.60 to 156.75 area. This limited upward movement aligns with recent economic data that has dampened dollar enthusiasm. Last week’s ISM Manufacturing PMI for December was weak at 47.9, and Friday’s Non-Farm Payrolls report indicated steady job growth without signs of economic overheating. This situation leaves the Federal Reserve with little reason to adopt a more aggressive approach, restricting the dollar’s potential.

Historical Context and Trading Strategies

Looking back at 2025, the Bank of Japan often resisted major policy changes, even as the yen fell. Intervention remains a constant threat, making traders cautious about pushing the pair too high too quickly, as they may fear sudden actions by officials in Tokyo. This history creates a wary market, keeping the currency within a range. For derivative traders, this setup suggests strategies that take advantage of range-bound movements and time decay. With implied volatility slightly higher due to recent geopolitical tensions, selling options could be an attractive strategy. An iron condor, with short strikes outside the expected 156.35-157.50 range, might capture this premium. Specifically, selling call options with strike prices at or above 157.50 fits the view that this resistance will hold in the coming weeks. This can bring in income from premiums collected as long as the dollar doesn’t make a strong rally. Given the softer US data, breaking last month’s high near 157.80 is not a primary concern at this time. After the wild market shifts of 2025, it’s crucial to remain alert to external risks. The forthcoming Supreme Court ruling on presidential tariff powers could cause sudden volatility across all asset classes. Therefore, any positions should have well-defined risk parameters to guard against unexpected market changes. Create your live VT Markets account and start trading now.

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