The USDJPY Daily Chart

Looking at the USDJPY daily chart, the pair is currently between two key moving averages: the 100-day moving average at 145.44 below and the 200-day moving average at 149.16 above. The price is also below the 38.2% retracement level from the 2022 low to the 2024 high, which is at 148.678. The 50% midpoint sits at 144.581, while the current price is at 147.20. In recent months, the price has stayed within these limits, with notable fluctuations around the US jobs report on July 31. Since that date, volatility has increased, and the market has been uncertain about its direction. The stock market’s decline after the FOMC minutes suggests that the Federal Reserve will be cautious about cutting interest rates. This pattern was reinforced by the July 2025 core CPI report, which showed stubborn inflation at 3.1%, well above the Fed’s target. As a result, protective strategies, like buying put options on the tech-heavy QQQ ETF, could be smart to guard against further declines.

Market Uncertainty and Strategies

This uncertainty has caused the VIX, which measures expected volatility, to rise to around 19. This is a significant increase from the calmer levels below 15 that we saw earlier in the year. Traders might take advantage of this by selling call credit spreads on the S&P 500. This strategy profits if the index remains stable or drifts lower, which seems likely in this nervous market. In the bond market, yields are slightly falling even though the Fed’s stance remains tough. This suggests that the market expects a potential economic slowdown. This mirrors the situation from late 2023 when fears about growth started to overshadow concerns about inflation. We think call options on long-term bond funds like TLT could perform well if recent data, like the downward revision of Q2 2025 GDP to 1.5%, continues to signal weakness. For currency traders, the USD/JPY pair is firmly within a range of roughly 145.40 to 149.20. With the Bank of Japan not signaling any major policy changes, there’s no strong reason for a breakout. This makes it a good environment for selling option premiums using an iron condor strategy, designed to profit from minimal movement. Overall, the mixed signals from various markets indicate a period of indecision in the coming weeks. We believe that derivative plays should focus on strategies that manage defined risks within a set range rather than betting on significant directional moves. The economic balancing act resulting from aggressive rate hikes from 2022 to 2024 continues to lead to choppy conditions. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now