Edward Culchenko
⬤ USD/JPY keeps trading near multi-month highs, making it a crucial barometer for carry trade unwind risk. The pair might try one more push higher—a move that would directly test levels widely seen as sensitive for potential intervention by the Bank of Japan and the New York Fed. The daily chart shows USD/JPY holding above 154 after a prolonged uptrend that kicked off earlier in 2025.
⬤ The price action shows a clear upward channel, backed by higher highs and higher lows. Fibonacci levels on the chart point to key resistance zones near 164 and 166, lining up with previous technical reaction areas. These levels mark the next upside targets if USD/JPY breaks out from its current consolidation.
A critical variable is whether an additional rally would automatically trigger policy intervention.
⬤ Meanwhile, momentum indicators show signs of fatigue. The RSI has dropped sharply from elevated readings, hinting at near-term exhaustion even though the broader trend stays intact. If authorities hold back from immediate action, USD/JPY could keep climbing, reinforcing yen weakness and keeping carry trade conditions alive.
⬤ This setup matters beyond just the currency market. USD/JPY is tightly linked to global risk appetite—sustained yen weakness supports leverage-driven strategies across asset classes. But any sharp reversal tied to intervention could tighten financial conditions and hit risk assets hard. With USD/JPY hovering near levels historically tied to policy responses, its next move will likely shape short-term market dynamics in a big way.
Edward Culchenko
