The US Dollar is gaining strength against the Japanese Yen but is in overbought territory, making it less likely to reach 158.90 today. The Dollar rose sharply, hitting 158.18, showing ongoing strength. If there is a pullback, it will likely stay above 157.40, with minor support around 157.75. Over the next one to three weeks, analysts expect the Dollar to continue rising after breaking past previous resistance levels. The key target to watch is last year’s peak near 158.90. The outlook remains positive as long as the Dollar stays above 157.00, which is seen as strong support.

Market Updates

In other news, Silver and Gold prices have soared due to geopolitical tensions and concerns about the Federal Reserve’s independence. Gold reached an impressive $4,620 per troy ounce. Meanwhile, Monero hit a new high, benefiting from increased interest in privacy-focused cryptocurrencies. Bitcoin stabilized above $90,000 amid a Department of Justice investigation into Jerome Powell. Ethereum fluctuated between $3,000 and $3,300, limited by declining retail demand. Strong upward momentum is pushing the US Dollar higher against the Japanese Yen. Looking back at early January 2025, a jump past the 157.50 level indicated a clear bullish trend. Derivative traders should consider strategies that profit from a continued rise, targeting the multi-decade high near 158.90. This trend can be explained by the different monetary policies seen in the past year. Throughout 2025, the Bank of Japan kept its negative interest rate at -0.1%, with core inflation averaging just 1.9%, missing its targets. This large interest rate gap with the US has made borrowing Yen to buy Dollars—known as the carry trade—consistently profitable, keeping the Yen weak.

Market Environment

Last year, the US Dollar was generally weak against most currencies due to political issues surrounding the Federal Reserve. The fact that USD/JPY still increased shows how fragile the Yen is. This implies that option volatility will be high, and traders might consider selling out-of-the-money put options below the strong support level of 157.00 to earn premiums. The move toward 158.90 is historically important, echoing highs from 1990 and causing concerns of intervention during the 2022-2024 period. Given the market instability that pushed gold prices past $4,600 last year, any bullish positions on this pair should be protected. A possible hedge includes taking long positions in assets that benefit from uncertainty in the US, such as gold or other major currencies. Create your live VT Markets account and start trading now.

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