The Japanese Yen experienced a sharp rally as the USD/JPY currency pair broke decisively below the psychologically significant 155.00 threshold, extending its decline toward 153.00. This move occurred amid thin holiday liquidity, widespread unwinding of carry trade positions, and renewed political scrutiny of Japan's monetary policy framework, catching market participants off guard and shifting technical focus to deeper support levels near 152.00 and 150.00 [1].
Teppei Ino of MUFG highlighted that the breach of 155.00, a level previously reinforced by multiple intervention episodes, marks a major technical turning point. US Treasury Secretary Scott Bessent's comments urging Japan to move away from reflationary policies further accelerated the unwinding of positions, putting additional downward pressure on the pair. Ino noted that unless USD/JPY quickly recovers above 155.00, the market could establish a new lower trading corridor with 155.00 as the upper boundary [1].
Analysts from ING, including Francesco Pesole, Frantisek Taborsky, and Chris Turner, emphasized that thin liquidity amplified the sell-off to 153.00 and warned that further carry trade unwinding could push the pair toward major support at 152.00 and potentially 150.00. Despite underlying support for the US Dollar from strong payroll data and high energy prices, they cautioned that standing against the current momentum is risky. They also identified the upcoming US CPI release as a key risk event that could influence the pair's direction [1].
Overall, both MUFG and ING analysts agree that USD/JPY faces significant near-term technical pressure, with the failure to reclaim 155.00 likely to solidify that level as a new resistance point [1].
CONCLUSION
The sharp breakdown of USD/JPY below 155.00 signals a major technical shift, with analysts warning of further downside risk toward 152.00 and 150.00. Market participants are advised to remain cautious, as the pair's inability to recover above 155.00 could establish a new, lower trading range. Upcoming US economic data, particularly the CPI release, remains a key risk event for the currency pair.