USDJPY – 01/12/2025

Published by - December 1, 2025 - Fundamental, Technical and Strategic Analysis

Fundamental / Economic Backdrop (short-term)

  • The biggest near-term shift for the Yen: Bank of Japan (BoJ) has recently signalled a rate-hike in December is now plausible. That raises expectations of higher Japanese yields, which supports the yen. Reuters+2Financial Times+2

  • Meanwhile, in the U.S., markets are increasingly pricing possible dovish moves from Federal Reserve (Fed), which weakens USD carry appeal relative to JPY, especially if yield differentials narrow. Investing.com UK+2Action Forex+2

  • Additionally, given the yen’s recent weakness and potential vulnerability, some investors may be ready to “buy the dip” in JPY if risk-sentiment turns — JPY often benefits from flight-to-safety demand. MarketPulse+1

→ Fundamental verdict (near-term): The balance is shifting more in favor of the yen (JPY) than the dollar (USD), relative to a few weeks ago — meaning USD/JPY has a credible risk of downward pressure, unless USD gets a strong catalyst (e.g. hawkish Fed or surprise macro strength).

[100% Retracement]

Technical / Market-Sentiment Picture (recent & short-term)

  • After a rally in recent months, USD/JPY has recently shown signs of losing momentum. Support — both technical (moving averages) and psychological — has formed around ≈ ¥154.00–¥154.50. Action Forex+2Forex+2

  • On the upside, resistance lies near ≈ ¥155.00–¥155.50; a clean break above could test ¥156.20, then possibly ¥158.00, if USD strength returns. Action Forex+2Investing.com UK+2

  • However, if yen-supportive factors (BoJ hawkishness, yield convergence) kick in, downside risk opens toward ¥152.00, with a further drop possible toward ¥150.00 if momentum breaks. MarketPulse+2deeside.com+2

  • Sentiment appears mixed: while some carry-trade-based USD/JPY bulls remain active, the growing possibility of BoJ rate hikes and narrowing yield differentials makes the pair more vulnerable to reversals. Markets+2deeside.com+2

→ Technical verdict (short term): USD/JPY is in a fragile equilibrium — likely to trade in a range in the short term, with bias slightly toward yen strength (i.e. downside pressure for USD/JPY) unless a strong bullish trigger emerges.

[100% Retracement]
[50% Retracement]

Intraday / Tuesday 2 Dec 2025 – Trading Outlook & Ideas

Given the environment, here are plausible intraday / near-term setups. As usual, treat them as scenarios, not certainties — use proper risk control.

Scenario Trigger / What to Watch Trade Ideas
Range / consolidation (base case) No big news; USD strength and JPY-support balance out • Buy dips around ¥154.20–¥154.60, target ¥155.20–¥155.50, SL below ~ ¥153.80
• Short rallies near ¥155.50–¥155.80, target ¥154.50–¥154.00, SL above ~ ¥156.20
Yen-strength move / downside (if BoJ hawkishness dominates or risk-off) BoJ-related headlines, safe-haven flows, dovish USD moves • Sell break below ¥154.00, target ¥152.50–¥151.80, SL above ~ ¥154.70
• On bounce after pullback, sell near ¥154.80–¥155.20, target ¥152.50
Upside bounce / USD rebound (less likely but possible) Strong USD-supporting data, risk-on sentiment returns, carry trades unwind • Buy break above ¥155.80–¥156.00, target ¥156.80–¥157.50, SL below ~ ¥155.20

Key levels to watch (short term):

What could move the pair:

  • Any BoJ communication — hawkish tone or policy hint → likely yen strength. Reuters+1

  • U.S. macro data / Fed signals — strong USD data or hawkish Fed → supports USD/JPY; dovish or weak USD data → pushes toward JPY strength.

  • Risk sentiment / global markets — risk-off → safe-haven JPY bid; risk-on → dollar-carry trades may return, supporting USD/JPY.

5-Day Outlook: 3-Scenario Probability Model

Here’s a probabilistic model for the next 5 trading days (Dec 2–Dec 8, 2025) for USD/JPY — similar in structure to previous models.

Scenario Probability Expected Range (5-day) Bias / Outcome
1. Base Case – Range / Slight Yen Strength 50% ¥153.50 – ¥156.00 Sideways to mildly bearish for USD — consolidation with possible drift downward.
2. Bearish Case – Yen Strength / BoJ-driven Drop 30% ¥151.50 – ¥153.80 JPY strengthens → USD/JPY dips, possibly testing mid-152 or low-152 area.
3. Bullish Case – USD Bounce / Risk-on / Carry Resumption 20% ¥156.50 – ¥158.50 USD recovers, risk-on returns, carry-trade resumes → USD/JPY pushes higher.

Interpretation

  • Base case (50%): Most likely — price remains in range, some oscillation between support and resistance, maybe slight downward bias as yen strength creeps in.

  • Bearish (30%): Given the BoJ hawkishness and possible risk-off or dovish USD environment, there’s significant chance that USD/JPY slides toward ~¥152.

  • Bullish (20%): A rebound remains possible but requires a clear USD-positive catalyst or renewed risk-on global sentiment.

Composite Strategy (for next 5 days)

  • Primary bias: Range-bound to modest downside — prefer selling strength (near resistance) or buying dips (near support) rather than aggressive directional bets.

  • Avoid large long positions unless a strong breakout (with volume, volatility, and confirmation) occurs above ~ ¥156.50.

  • Keep exposure light — fatigue/policy risk is high; swings can be sharp if BoJ signals or U.S. data shift sentiment.

What to Watch Closely Over the Next Few Days

  • Statements or minutes from BoJ, especially any hawkish tone — a big risk-on for yen strength.

  • U.S. macro releases (inflation, jobs, Fed speak) — strong USD data could support upside; weak data could accelerate yen recovery.

  • Risk sentiment globally — geopolitical developments, equity markets, commodity prices — which influence carry/yield trades and demand for safe-haven (JPY).

  • “Carry-trade unwind” risk — if yield differentials narrow (due to BoJ hike or Fed cuts), USD/JPY could drop quickly.

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