The US Dollar (USD) is facing challenges against the Japanese Yen (JPY), with a potential rise in sight but not enough momentum to easily break through 156.20. The USD closed at 155.92, climbing 0.37% after moving between 154.88 and 155.98. While upward momentum is slowly increasing, it still lacks the force needed to surpass the 156.20 mark, with support levels at 155.65 and 155.45. Looking at a longer timeframe, for the USD to continue declining, it needs to close below 154.65. The USD did fall briefly below this level but could not maintain that position. Although it reached 155.98, the rate of decline is slowing, which suggests that a drop below 154.65 is not likely unless the USD moves above 156.20, indicating a change in resistance.

Market Observations

This article shares insights about the market and reminds readers to conduct their own research before making investment choices. It discusses various topics, including crude oil imports and the Federal Open Market Committee’s (FOMC) effect on the USD. The editorial guidelines focus on impartiality, and FXStreet warns that it is not responsible for investment results. As of December 9th, 2025, the USD/JPY pair is trading in a narrow range. Current upward momentum is weak, making it hard to break the strong resistance at 156.20 in the near future. A key level to monitor for a continued downward movement is a daily close below 154.65. Recent economic data explains this caution. The November Non-Farm Payrolls report indicated slower wage growth, and the latest Consumer Price Index (CPI) report showed US inflation easing slightly to 3.0%. These numbers lessen the urgency for the Federal Reserve to take aggressive measures, which limits the dollar’s strength. Conversely, Japan’s inflation rate has stayed stubbornly above the Bank of Japan’s (BoJ) 2% target for over a year, currently at 2.8%. This situation puts pressure on the BoJ to tighten its policy eventually, which would boost the yen. Traders are carefully watching for any policy changes, making the 154.65 support level particularly important.

Trading Strategies

For traders in derivatives, this scenario suggests approaches that could profit from either a breakout or continued range trading. One option is to buy a short-term strangle with a call option above 156.20 and a put option below 154.65. This strategy could be effective leading up to next week’s FOMC announcement, as it takes advantage of increases in volatility, regardless of direction. We also recall that the Ministry of Finance intervened to buy yen in 2024 when the pair was in a similar position, reinforcing the resistance around the 156 mark. Therefore, for those who are bearish, a patient strategy would be to wait for a confirmed daily close below 154.65 before opening new short positions or buying puts. Such a breakdown would signal a genuine shift in momentum. Create your live VT Markets account and start trading now.

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