Technical Rebound From Support Targeted Before Major BoJ Move

Summary:

If the price reacts positively to this support once more, we could witness an upward impulse toward the immediate resistance at 156.16.

Buy USDJPY

End Time

CLOSED

154.938

ENTRY

156.160

TGT

154.000

155.547 +0.835 +0.54%

502

Points

Profit

154.000

155.440

CLOSING

154.938

ENTRY

156.160

TGT

Market participants are currently fixated on the Bank of Japan (BoJ) policy decision scheduled for this Friday. The central bank is widely anticipated to hike its policy rate to 0.75%, a move that would establish the highest interest rate level in over three decades. Given that this hawkish shift is largely priced in, investors will likely pivot their attention toward Governor Kazuo Ueda’s forward guidance, seeking clues regarding the timing and trajectory of subsequent hikes. Ahead of the decision, Japan’s economic calendar features crucial November trade data on Wednesday, including adjusted merchandise trade balances, exports, and imports.

Simultaneously, the US economic landscape remains complex. Recent data from the U.S. Bureau of Labor Statistics (BLS) offered a conflicting narrative: while November’s workforce expansion exceeded forecasts, the unemployment rate simultaneously climbed to its highest peak since 2021. Despite this labor market softening, which theoretically supports aggressive easing, expectations for a January 2026 rate cut remain notably low at approximately 25%, according to Capital Edge data.

Further complicating the outlook, delayed retail sales figures from the U.S. Census Bureau suggest that American consumer spending remains resilient, with October sales figures holding steady. However, the underlying data reveals a growing burden on households due to rising costs for food, furniture, and imported goods—inflationary pressures exacerbated by current tariff policies.

Atlanta Fed President Raphael Bostic characterized the latest jobs report as a "mixed bag," stating it has not fundamentally altered his perspective. He expressed a preference for holding rates steady during the Fed's most recent deliberations, citing "multiple surveys" that indicate rising input costs for businesses. Bostic noted that firms are determined to protect their profit margins by passing these costs on to consumers through higher prices. He cautioned that the Fed should not prematurely declare victory over inflation, even as he projects 2026 GDP growth at roughly 2.5%.

This cautious tone mirrors the Federal Reserve’s broader strategic shift. Last Wednesday’s 25 basis point (bps) cut came despite inflation lingering near 3%. Chair Jerome Powell emphasized a "wait-and-see" approach, signaling an impending pause in the easing cycle. Having already implemented 175 bps of total cuts, Powell maintains that policy has returned to a neutral range and is no longer "strongly restrictive." Technical Rebound From Support Targeted Before Major BoJ Move_1

Technical Rebound From Support Targeted Before Major BoJ Move_1

Technical Analysis

The USD/JPY pair has established solid support at the 154.49 level, a zone previously tested in early December. In that prior instance, the pair initiated a bullish rally that peaked at the December high of 156.94. If the price reacts positively to this support once more, we could witness an upward impulse toward the immediate resistance at 156.16.

From a moving average perspective, the 100 and 200-period MAs on the 4-hour chart are currently situated at 155.58 and 155.74, respectively. Their close proximity creates a significant technical cluster near the upside target. A decisive close above these averages would likely accelerate the bullish momentum toward the resistance zone. Notably, this area also aligns with the 0.618 Fibonacci Retracement level of the recent move. Consequently, any upward surge toward this confluence of indicators should be viewed as a technical retracement, potentially offering a strategic entry point for sellers before the pair resumes its broader bearish trend.

Trading Recommendations

Trading direction: Buy

Entry price: 154.92

Target price: 156.16

Stop loss: 154.00

Validity: Dec 26, 2025 15:00:00

Risk Warnings and Investment Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

Quick Access to 7x24

Quick Access to More Editor-selected Real-time News