USDJPY – 02/12/2025

Published by - December 2, 2025 - Fundamental, Technical and Strategic Analysis

Fundamental / Economic Backdrop (short term)

Current USD/JPY behaviour reflects a combination of U.S. rate expectations, Japanese monetary-policy repricing, and global risk appetite:

  • Bank of Japan (BoJ) policy expectations continue to shift toward the possibility of additional tightening or a further reduction in accommodation. Any increase in Japanese yields or credible talk of policy normalization tends to support JPY.

  • Federal Reserve outlook remains uncertain. Markets price a non-aggressive easing path, but any strong U.S. economic data could revive USD strength via higher rate expectations.

  • Yield-spread dynamics between U.S. and Japanese government bonds remain critical; narrowing spreads favour yen, while widening spreads support USD.

  • Risk sentiment influences the pair:

    • Risk-off → JPY tends to strengthen (safe-haven).

    • Risk-on → USD/JPY may drift higher if yields support USD.

Fundamental / Economic verdict

Short-term fundamentals point to a neutral-to-mildly-bearish bias for USD/JPY, due to persistent BoJ normalization expectations and vulnerability of USD to yield-curve repricing. Without material U.S. strength, the pair faces modest downward pressure or consolidation near recent ranges.

[100% Retracement]

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Technical and Market Sentiment (short term)

USD/JPY technical structure suggests consolidation with downside vulnerability. Key elements include support clusters, resistance zones, and Fibonacci retracement levels:

Support levels

Zone Technical Basis
153.80 – 154.20 Major short-term support, prior demand zone
152.60 – 153.00 38.2% Fibonacci retracement of prior swing
151.80 – 152.20 Structural support, deeper pullback potential

Resistance levels

Zone Technical Basis
155.40 – 155.80 Key rejection zone, near-term ceiling
156.50 – 156.80 Next resistance, aligns with 23.6% Fib extension
158.00 Psychological and historical resistance band

Fibonacci structure (approx.)

  • 0%: recent high

  • 23.6%: ~156.60

  • 38.2%: ~153.00

  • 50%: ~151.90

  • 61.8%: ~150.70

Price currently trades between the 23.6% and 38.2% retracement bands, indicating a mid-range consolidation environment.

Technical verdict

Technical conditions favour a range-bound to mildly bearish short-term bias. Support remains firm near 153.80–154.20, but repeated failures near 155.40–155.80 limit bullish conviction. Fibonacci retracements imply potential tests of lower levels if momentum weakens.

[100% Retracement]
[50% Retracement]

Strategy (short term)

Intraday / Early Week (Wednesday 3 December 2025) – Setup and Trade Ideas

Scenario Trigger / Context Trade Setup
Range Play (base case) Price holds between 153.80–155.80 • Buy near 153.80–154.20, SL below 153.40, TP 155.00–155.40.
• Sell near 155.40–155.80, SL above 156.10, TP 154.40–154.00.
Bearish Continuation Break and H1 close below 153.80 • Sell 153.70–153.80, SL above 154.20, TP 152.80, then 152.20.
Bullish Breakout (lower-probability) Break above 155.80 with volume • Buy 155.90–156.00, SL below 155.40, TP 156.60, then 157.40–158.00.

Key intraday zones for Wednesday:

  • Intraday support: 154.00 – 154.20

  • Intraday resistance: 155.40 – 155.80

Base Case & Risk-Managed Outlook

  • USD/JPY is expected to remain in a broad 153.80 – 155.80 range unless U.S. data or BoJ communication drives volatility.

  • Strategy preference:

    • Fade extremes, avoid mid-range entries.

    • Maintain tight stops due to volatility around yield-sensitive headlines.

    • Avoid breakout trades unless confirmed via higher-timeframe candle closes.

5-Day Outlook Scenarios

Scenario Approx. Probability Expected Range Bias & Drivers
Base – Range with mild yen strength 50% 153.00 – 155.80 BoJ expectations cap upside; USD sentiment mixed; consolidation persists.
Bearish – JPY outperformance 30% 151.80 – 154.80 Risk-off flows, BoJ hawkish tone, narrowing U.S.–Japan yield spreads.
Bullish – USD recovery 20% 155.80 – 158.00 Strong U.S. labour/inflation data or yield uptick supports USD.

Scenario interpretation:

  • The base scenario anticipates consolidation, suitable for range-trading.

  • The bearish scenario becomes dominant if macro signals favour yen (e.g., BoJ communication or risk-off).

  • The bullish scenario requires a clear USD-positive catalyst; otherwise upside is restricted.

Overall Summary

USD/JPY currently reflects a balance between U.S. rate expectations and Japan’s policy normalization path. Fundamentals lean slightly JPY-positive, technicals show capped upside and risk of mid-range drift, and near-term strategy favours range trading with downside awareness. The next five days are likely to remain volatile but contained unless a major macro catalyst shifts the landscape.

[100% Retracement]
[61.8% Retracement]
[38.2% Retracement]

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