- The US dollar rose against the Japanese yen to close out 2025 as we continue to see a lot of back-and-forth action here.
- Ultimately, this is a market that I think continues to see a lot of noise and choppy behavior, but I also recognize that the interest rate differential continues to favor the United States dollar.
The Bank of Japan is in a situation where it simply cannot tighten monetary policy too much because of the massive amount of debt that the Japanese are currently suffering from. With this being the case, I think you’ve got a situation where you remain buy on the dip as far as your attitude is concerned.
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Technical Levels and Outlook
The 50-day EMA reaching the 155 yen level is likely to see quite a bit of support, just as the 158 yen level above is significant resistance. If we can break above there, then it could open up the possibility of a move to the 160 yen level, and I do think that happens sooner or later.
Ultimately, this is a market that I think will continue to be very noisy, but again, as you get paid at the end of every day to hang on to the US dollar against the Japanese yen, I think you need to keep that in the back of your mind.
The market breaking down below the 50-day EMA opens up the possibility of a move down to the 153 yen level, but I don’t think that is the most likely of outcomes. Ultimately, I look at this as a market that continues to favor quite a bit of momentum, but in the meantime, we are just simply working off some of that momentum that we had built up over the last couple of months. I continue to favor the US dollar over the Japanese yen despite the fact that the Federal Reserve is likely to cut rates again.
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