- USD/JPY experienced some fluctuations after an early increase, yet current support levels along with yield disparities still favor the dollar.
- The carry trade dynamics and Japan’s policy constraints suggest that any pullbacks could be seen as buying opportunities.
The US dollar initially seemed to gain strength against the Japanese yen, but then it turned around, showing some hesitance in maintaining that bullish trend. It appears that the 155 yen level may act as a supportive zone, which could present a minor buying chance. It’s hard not to notice the uncertainties surrounding the Federal Reserve and its upcoming decisions. However, I’m pretty sure that interest rate discrepancies will remain in the dollar’s favor.
Carry trade trends remain in favor of the dollar
Looking ahead, it seems this currency pair will likely trend upwards. Even if it dips a bit from here, there’s a strong chance that the 50-day EMA will provide support around the 154 yen mark, possibly bouncing back to 152 yen. That said, I believe this will ultimately create a buying opportunity, particularly if the Bank of Japan’s review results later this week lean favorably.
This choppy lateral volatility kind of makes sense to me. I’ve been consistently leaning towards this pair for months now. It’s rewarding because, with the carry trade, I gain daily. The carry trade is set to regain importance, especially if the US maintains a hawkish stance beyond current expectations.
Moreover, most key U.S. economic indicators suggest that 2026 could be promising for the U.S. economy. Considering this, along with Japan’s ongoing structural challenges in tightening monetary policy, I think these dips could present valuable long-term buying opportunities. Even short-term traders seem eager to participate.
Perhaps you’re interested in exploring our USD/JPY forex analysis and predictions? Here’s a list of Japanese forex brokers I’m currently checking out.
Christopher Lewis has been involved in foreign exchange trading for over two decades. He’s contributed to various financial publications, including FX Empire and Investing.com, as well as his own site, The Trader Guy. Christopher specializes in technical analysis for trade identification and enjoys trading across currencies, stock indices, and commodities, often favoring a long-term approach where trades can last days or even weeks.
