The US Dollar (USD) might stay strong, but it may not reach 157.20. Analysts from UOB Group suggest that for the USD to gain further towards 157.90, it needs to close above 157.20. Over the last 24 hours, the USD climbed from 155.85 to a high of 156.95, even though there were doubts about its ability to break through 156.20. While more strength for the USD is possible, current conditions are stretched, and it may not hit 157.20 today. It’s crucial for the USD to stay above 156.30, with minor support at 156.55.

Performance Outlook

In the coming 1-3 weeks, the USD has performed well, closing at 156.86, which is above the strong resistance level of 156.20. Although the downward pressure has eased, the USD needs to close above 157.20 for more upward movement toward 157.90. If the strong support level at 155.80 holds up in the next few days, the chances of a close above 157.20 may increase. There is significant resistance for USD/JPY at 157.20, which makes further gains challenging in the short term. The recent rapid rise has pushed the pair into overbought territory, so caution is advised for new long positions. This could be a good time to sell short-dated call options with strikes above 157.20, expecting this ceiling to hold. The dollar’s strength is supported by recent U.S. economic data from late November and early December 2025, showing inflation staying above 3.1% and a strong labor market with over 190,000 jobs added. Meanwhile, the Bank of Japan continues its dovish policy, resulting in a historically wide interest rate gap between the U.S. and Japan. This difference favors the dollar over the yen.

Intervention Risks

Traders should watch for potential intervention from Japanese authorities at these sensitive levels. Back in 2022, significant yen-buying operations happened when the pair went above 150, and warnings increased as it approached 160 in 2024. A sudden, sharp rise could prompt a defensive reaction from the Ministry of Finance. To maintain the current upward momentum, the pair must stay above the key support level at 155.80. A close below this level would undermine the positive outlook and indicate that the recent rise has faltered. Derivative traders can use this 155.80 level to set stop-losses on long positions or to buy protective put options. Create your live VT Markets account and start trading now.

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