USDJPY Gains Extend to Yearly Highs

Key Events

• USDJPY gains extend to yearly highs near 158 as the DXY climbs to 100.30.
• 2025 extremes have reached exhaustion zones, with risk assets facing consolidations and pullbacks, while dollar pairs extend gains.
• Non-farm payrolls recorded 119K new jobs, well above the expected 55K.

DXY Outlook: Monthly Time Frame – Log Scale

 

From a long-term perspective, the high-timeframe structure on the DXY remains intact as it holds a bullish rebound from the lower boundary of a channel extending from the 2008 lows, underscoring the strength of a 17-year support zone near 96.

The strength of this sentiment rebound—driven by exhausted 2025 policies, momentum, and sentiment—is being reflected across major currency pairs, dollar pairs, indices, and commodities.

Dow Jones: Facing drawdowns below the trendline and the 48,000 trendline resistance stemming from 2020.

Gold: Facing pullback risks below its 10 year pattern target near $4,400

Silver: Facing pullback risks below a 45-year resistance at $54.

DXY: Attempting to stabilize above the 100 mark, while USDJPY soars to yearly highs near 158.

USDJPY Outlook: 3-Day Time Frame – Log Scale

 

From a three-day perspective, USDJPY is trading around the mid-zone of a duplicated uptrending channel extending from the April 2025 lows, just below the 157 resistance.

A bullish bias persists within the sequence of consecutive higher highs and higher lows toward year-end. However, overbought momentum signals are beginning to emerge, suggesting a possible consolidation phase ahead of the holiday period.

USDJPY Scenarios

• Upside: A daily close above the 157 mark could extend gains toward 161, confirming or reversing a potential breakout to record levels. This aligns with DXY strength, should it hold above the 101.80 mark and retrace back to the mid-zone of its 17-year channel between 103 and 105.
• Downside: Given overbought momentum levels last seen in January 2025, caution is warranted near the recent highs. Pullback risks may extend down to the upper boundary of the April–November channel near 154.80, offering another bullish rebound opportunity.
  Failing that, a deeper retracement back inside the channel could unfold toward the 153 zone first, followed by 150.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves