📌 Fundamental Overview
🇯🇵 Japan
• Positive Japanese manufacturing PMI (50.0) boosted yen sentiment but did not significantly strengthen the currency. This PMI print signaled stabilization rather than expansion, yet overall yen pressure remains due to policy divergence.
• BoJ not committed to active yen support.
The Japanese government and Bank of Japan “show no real commitments” to halt yen weakness. This keeps USDJPY supported as markets expect only gradual normalization from the BoJ.
• Policy normalization expectations for 2026:
FreshForex forecasts highlight growing expectations that BoJ will continue tightening in 2026 after reducing bond purchases and seeing rising Japanese yields. This reduces the appeal of yen-funded carry positions but does not reverse the yen’s structural weakness yet.

🇺🇸 United States
• Mixed early January USD flows:
The dollar initially strengthened on geopolitical events in Venezuela but later weakened as markets reassessed the impact and risk appetite stabilized.
• Upcoming U.S. macro data:
Later week releases (labor and inflation linked data) will likely set the tone. Historically, the USD strengthens in early January after December softness—supportive for USDJPY unless data disappoints.
• Fed outlook:
With much easing already priced in, further downside in USD requires notably weak data. Otherwise, the structural yield advantage over Japan should keep USDJPY supported.

📊 Technical Analysis
USDJPY remains in a broad bullish channel, though short term dips are possible.
Support Levels
• 156.32 — Major intraday support.
• 153.05 — Key weekly support (start of deeper correction).
• 151.55 — Break here invalidates broader uptrend.
Resistance Levels
• 158.30 — Immediate resistance, critical for continuation.
• 159.35 — Weekly breakout confirmation level.
• 160.00 — Structural “stress line”, often triggering talk of intervention.
Momentum Evaluations
• Markets remain “paid to be long” USDJPY due to yield differentials.
• RSI and intraday signals show positive pressure after clearing 156.95 resistance.
• USDJPY continues to trade above the EMA50, providing dynamic support.

📈 Trading Scenarios
🔵 Bullish Scenario (Primary)
• Entry: Above 158.30
• Targets:
o 159.35,
o eventual extension toward 160.00
• Stop Loss: Below 156.30
• Rationale:
o Positive USD seasonal flows (early January)
o Lack of BoJ resistance to yen weakness
o Uptrend intact above EMA50
🔴 Bearish Scenario (Short Term Correction)
• Entry: Rejection at 158.30 – 159.35
• Targets:
o 156.30,
o 153.05 if selling intensifies
• Stop Loss: Above 159.40
• Rationale:
o Strong Japanese yields + BoJ normalization chatter
o Potential USD softening from late week U.S. data