USD/JPY Outlook as it hits 155.00: PM Takaichi drives the pair to new cycle highs

When the USD/JPY was free-falling toward 146.00 before the election results, few traders could have imagined such a sharp reversal was about to unfold.

Appointed in early October as a replacement for the departed Prime Minister Ishiba, PM Sanae Takaichi immediately turned on the taps of massive economic support for the Japanese economy.

The issue for yen bulls is that the Bank of Japan was on track to normalize monetary policy—after two decades of ultra-loose conditions—amid a return of inflation.

That trajectory now faces resistance from a prime minister eager to influence the BoJ, saying she “strongly hopes the BOJ conducts policy appropriately” in a speech at the Japanese Parliament.

Such remarks often trigger strong market reactions, as traders progressively price a not-so-independent central bank and politic influences hurting a stable resolution of inflation – both not good for any currency.

As a result, USD/JPY has surged more than 800 pips (about 0.56%), now trading just below the 155.00 handle, a level that has already prompted verbal intervention from the Finance Minister, who condemned the yen’s rapid slide.

In any case, let’s dive into a multi-timeframe analysis of USD/JPY to identify where the pair could be heading next.

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USD/JPY bulls launch a new offensive to break the 154.50 to 155.00 resistance which will act as a last barrier to a full-on breakout in the pair.

With the Bank of Japan still hesitant to pull the trigger on a hike, only a few technical barriers are stalling the move.

The 155.00 level is acting strong and will be a key point to monitor towards the session close:

• Expect large reactions if the pair closes above the level.
• Failing to close above will give more points for mean-reversion, with the market assuming that today's comments were priced in.

An ascending wedge is also largely in place which contains the price action for now but also gives another element to watch on breakout/rejection scnearios.

Let's take a closer look.

USD/JPY technical levels of interest:

Support Levels:

• Session lows and short-term support 154.050
• Short-term support 153.50
• Momentum pivot 152.00 to 152.50
• 151.50 Oct 28 rebound (minor support)

Resistance Levels:

• Session highs 155.047
• Daily Resistance at February 2025 highs 154.50 to 155.00 (imminent resistance)
• 156.00 to 156.70 Next main resistance
• 158.00 to 160.00 Yearly Resistance

The shorter timeframe shows a more balanced price action on the short-term, with some bull-exhaustion towards overbought levels.

This gives that much more emphasis on the 155.00 handle which will be the level which dictates upcoming trends.

If a small retracement extends from here, watch the reactions at the bottom trendline of the wedge to spot if buyers recharge – Failing to do so may prompt further downside.

Safe Trades!

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