The USDJPY pair is currently moving within a stable range as traders wait for new developments that could trigger a breakout. The US dollar fell after a weak Non-Farm Payroll (NFP) report but has since recovered slightly. Markets are anticipating three rate cuts by the US Federal Reserve by the end of the year (68 basis points), along with an 8% chance of a 50 basis point cut in September, depending on the Consumer Price Index (CPI) report. If economic activity picks up, the outlook for the dollar might change, but the overall trend seems to be downward unless strong data appears. The yen has not seen much change despite the resignation of Japanese Prime Minister Ishiba, which caused a brief impact on the currency. There was also a short rally following news about potential Bank of Japan (BoJ) rate hikes, but these gains were not sustained. For the yen to strengthen further, we need to see weak US data or strong inflation figures from Japan.

Technical Analysis

Looking at the technical side, the daily chart for USDJPY shows a bounce at the 145.50 trendline. A rise toward the 148.50 resistance might attract sellers, while buyers will look to push toward 151.00. The 4-hour chart indicates that the pair is trading within a range, with traders buying at support and selling at resistance. The 1-hour chart shows recent consolidation, with buyers eyeing a breakout at 148.50. Key upcoming events include the US CPI report, Jobless Claims numbers, and the University of Michigan Consumer Sentiment survey. As of September 11, 2025, the USD/JPY pair appears to be stuck in a familiar channel, indicating traders’ uncertainty. Immediate support is around 146.60, with strong resistance at 148.50. This sideways movement suggests that options strategies aimed at profiting from low volatility or a sudden breakout are ideal.

Options Strategies and Market Dynamics

Due to the ongoing consolidation, selling volatility through an iron condor with strike prices outside the 146.00 to 149.00 range could be profitable. This strategy works best if the pair stays within this range in the coming weeks. The Cboe USDJPY Volatility Index (JVIX) has been around 8.5, a level not seen since July 2025, making selling premium attractive but indicating complacency. A significant development occurred this morning with the release of the US Consumer Price Index for August. The report showed yearly inflation at 2.9%, lower than the expected 3.1% and a considerable drop from the previous month. This disappointing figure raises the likelihood of a downward breakout for USD/JPY. Following the weak CPI data, futures markets are now pricing in an 85% chance of three Federal Reserve rate cuts by the end of 2025, based on the CME FedWatch Tool. To prepare for further dollar weakness, traders might consider buying USD/JPY put options with a strike price below the 146.60 support level. This situation is reminiscent of late 2023 when weak US economic data led to a sharp drop in the pair from above 151.00. On the yen side, the Bank of Japan is under increasing pressure as Japan’s core inflation has been over the 2% target for almost two years. Any unexpected hawkish comments from the BoJ could greatly strengthen the yen. Holding long-dated JPY call options may be a good hedge against sudden policy changes. Alternatively, if traders have already factored in the dovish peak, any signs of economic strength could reverse the dollar’s decline. A decisive break above the 148.50 resistance would signal this shift. In that case, buying call options targeting 151.00 would make sense for a bullish reversal. Create your live VT Markets account and start trading now.

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