USDJPY Signs of Exhaustion Near 155 as Yen Sentiment TurnsUSD/JPYOANDA:USDJPYultreosforexUSDJPY is showing early signs of fatigue near the 155.00 resistance area, a level that has repeatedly triggered warnings from Japanese officials. After an impressive multi-week rally driven by yield differentials, the pair now faces growing pressure as U.S. rate expectations cool slightly and speculation builds that the Bank of Japan may step in to curb excessive yen weakness. The chart suggests room for a pullback toward the 150.00 zone if the market shifts into a short-term correction phase. Current Bias Mildly bearish in the near term, with potential for a correction from 154.50–155.00 toward 150.00 if yields or risk sentiment soften. Key Fundamental Drivers U.S. Dollar Drivers: The dollar’s momentum has eased after a mixed batch of U.S. data showing slowing job growth and cautious comments from Fed officials about the pace of future rate cuts. Japanese Policy Outlook: The BOJ remains under quiet but rising pressure to acknowledge persistent inflation and the side effects of prolonged easing. Markets are watching for any language signaling the eventual normalization of policy. Yield Spreads: The U.S.–Japan 10-year yield differential remains wide but has stopped expanding, which could limit further USDJPY upside. Macro Context The macro backdrop points to a potential cooling phase for USDJPY. The Fed’s gradual pivot toward rate normalization and lower long-end yields reduce upward pressure on the pair. Meanwhile, Japan’s inflation remains above target, and wage growth is improving, adding weight to the argument for a modest policy shift by the BOJ in early 2026. On the geopolitical front, lingering trade tensions and tariff rhetoric continue to influence sentiment. However, the yen’s traditional role as a safe-haven currency means any escalation in global risk aversion or equity volatility could trigger sharp JPY strength. Interest rate expectations: Fed: Market pricing implies one rate cut possible in mid-2026 if inflation slows sustainably. BOJ: Potential for policy tightening in 2026 remains on the radar, with minor adjustments likely before that. Primary Risk to the Trend A stronger-than-expected U.S. CPI print or hawkish Fed communication could renew dollar strength and push USDJPY back above 155. Conversely, verbal or actual BOJ intervention would quickly unwind speculative longs and drive the pair lower. Most Critical Upcoming News/Event U.S. CPI and PPI inflation data BOJ Governor Ueda’s policy commentary U.S. Treasury yield developments Leader/Lagger Dynamics USDJPY acts as a leader among JPY pairs, often setting the tone for crosses like GBPJPY and CADJPY. It follows broad U.S. dollar sentiment but can detach temporarily when Japanese policy expectations or intervention risk dominate. Key Levels Support Levels: 151.00 / 150.00 Resistance Levels: 154.50 / 155.00 Stop Loss (SL): 155.40 Take Profit (TP): 151.00 (initial), 150.00 (extended) Summary: Bias and Watchpoints USDJPY is nearing an exhaustion point after testing the upper boundary near 155. With U.S. yields stabilizing and the BOJ maintaining a cautious but firmer tone, the near-term setup favors a bearish correction toward 151.00–150.00. A stop loss above 155.40 protects against renewed dollar strength, while profit-taking near 150.00 captures potential downside momentum. Traders should keep an eye on Fed communications and BOJ rhetoric—any sign of tightening bias from Japan or yield pullbacks in the U.S. could accelerate yen recovery. In the meantime, this remains a market sensitive to intervention talk and sentiment swings, making disciplined risk management essential.