The currency pair has eased a bit from its recent highs, thanks to recent comments. Daily momentum is steady, with the Relative Strength Index (RSI) showing hints of a potential decline. Resistance levels are at 155 and 156.10, while support is found at 154.40 and 153.10, in line with the 21-day moving average.

Potential For Sudden Reversal

Currently, USD/JPY is testing the 155 mark. The main challenge is the weak yen fundamentals and the increasing risk of government intervention. The reasons for a weaker yen are compelling, driven by a cautious Bank of Japan and Japan’s financial strains. This creates a tricky situation: the trend is upward, but the risk of a sudden downward shift is considerable. This viewpoint is supported by recent November 2025 data. Japan’s core Consumer Price Index (CPI) for October was 2.7%, which was below expectations, easing pressure on the Bank of Japan to tighten its policy soon. On the other hand, the latest US non-farm payroll report showed strong growth, with 210,000 jobs added, highlighting the significant interest rate gap favoring the dollar. We’ve seen this situation before, particularly during interventions in late 2022 and spring 2024. In those times, Japanese officials intervened after the pair crossed crucial psychological levels, leading to rapid declines that hurt yen short-sellers. The recent warnings from Finance Minister Katayama echo the language used prior to those past interventions.

Strategies For Traders

Given the current circumstances, a wise strategy for the upcoming weeks is to buy USD/JPY put options. This will provide protection against a sudden drop due to intervention, effectively acting as insurance for long positions. Implementing a bear put spread can help lower the cost of this protection, making the hedge more affordable. Alternatively, traders should consider buying volatility, as the market is poised for a big move. A long strangle strategy, which involves purchasing both an out-of-the-money call and an out-of-the-money put, can be profitable whether the price jumps above 155 or falls sharply. One-month implied volatility has risen to over 11%, reflecting that the options market is anticipating a significant move. Create your live VT Markets account and start trading now.

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