On Friday, December 27th, during the European trading session, the USD/JPY has been consolidating below the 158.00 level as of now. On Thursday of this week (December 26th), the exchange rate broke through the 158.00 mark for the first time since July of this year.

From a fundamental perspective, the strength of the US dollar is supported by multiple factors. Firstly, the strong performance of US economic data provides greater flexibility for the Federal Reserve's monetary policy, enabling it to maintain a relatively hawkish stance among major central banks worldwide. In addition, the Bank of Japan has only made some moderate adjustments in recent months on the basis of maintaining a long-term ultra loose monetary policy, resulting in the yen remaining weak relative to the US dollar.

The appreciation of the US dollar is also driven by risk aversion. Despite facing multiple uncertainties in the global economy, the attractiveness of the US dollar as a safe haven currency has significantly increased, especially against the backdrop of escalating geopolitical tensions and slowing global economic growth. At the same time, the market is adopting a wait-and-see attitude towards whether the Bank of Japan will raise interest rates in the future, and the central bank's continued low interest rate policy has further weakened the competitiveness of the yen in the international market.

In addition, the strength of the US dollar/Japanese yen also reflects the market's expectations for future Federal Reserve policies. Although the market generally expects the Federal Reserve to gradually enter a cycle of interest rate cuts next year, recent hawkish statements indicate that the Fed may reduce the frequency of interest rate cuts, further supporting the strong performance of the US dollar.

However, analysts caution that if the Bank of Japan suddenly increases its monetary policy adjustment in the future, it may provide short-term support for the yen and weaken the upward momentum of the US dollar/yen.

In terms of technology, analyst Boyadjian provided the following interpretation:

From a technical perspective, the upward trend of the US dollar/Japanese yen is still stable, but it is currently facing the test of the key resistance level of 158.00. The following is a specific technical analysis:

1. Overview of current trend: On Thursday, the US dollar/Japanese yen broke through 158.00, marking the first time since July, indicating that the market's bullish sentiment remains strong in the short term. However, as of now, the exchange rate has not been able to firmly stand at this critical level, indicating that upward movements can be weakened.

2. RSI and MACD signals:

RSI (Relative Strength Index): Although the current RSI indicator is on the rise, it has approached the overbought area of 70 and there are signs of consolidation near this area. This indicates that the upward momentum has slowed down and a stronger driving force is needed to further break through the current resistance.

MACD: MACD presents a more optimistic signal, with fast and slow lines continuing to climb above the zero axis, indicating that the upward trend has not completely ended.

3. Resistance level analysis:

Resistance in the 158.00 area: As a key resistance level in the near future, the breakthrough or failure of the 158.00 area will determine the direction of short-term trends. If the bulls successfully break through this level, the upward target of the market will directly point to the psychological level of 160.00.

160.00 psychological barrier: This level is the next key resistance that the market is concerned about, and its breakthrough will further strengthen bullish confidence.

162.00 key resistance: 162.00 is a more important resistance area, and the price peak in July this year failed to break through this level. If the price successfully stabilizes above 162.00, it will play a decisive role in the long-term bullish trend of the US dollar/Japanese yen.

4. Support level analysis:

157.15 (78.6% Fibonacci retracement level): If the price fails to break through 158.00 and begins to retrace, 157.15 will be the first important support area. This level is the 78.6% Fibonacci retracement level of the downward trend from July to September, and is expected to provide strong support for bulls.

155.00 support: If the price further falls below 157.15, 155.00 will become the next key support area. Looking back at historical data, 155.00 provided strong support multiple times in May and June.

153.40 support (61.8% Fibonacci retracement level): The lower position is around 153.40, which is not only the 61.8% Fibonacci retracement level, but also strengthened by the 20 day and 50 day moving averages.

148.63 (December low): If the price continues to decline and falls to 148.63, it will seriously weaken the medium-term bullish structure of the USD/JPY, and may even reverse the overall trend.

5. Long short possibility analysis:

Bullish scenario: If the USD/JPY successfully breaks through 158.00 and stabilizes at this level, it may further advance towards 160.00 and 162.00. This will significantly enhance the market's confidence in the long-term upward trend.

Bearish scenario: If the resistance of 158.00 is not broken and leads to a downward correction in price, the USD/JPY may face the risk of retesting the support levels of 157.15 or even 155.00. A further drop below 153.40 could trigger a larger decline and challenge the December low at 148.63.

6. Overall trend: From the daily chart, the overall upward trend of the US dollar/Japanese yen is still continuing, but it is facing the test of key resistance levels. The positive signal of MACD indicates that the upward momentum has not completely dissipated, while the overbought signs of RSI suggest that the market may need some time for consolidation or correction.

summary

From the current fundamental and technical analysis, the US dollar/Japanese yen is at a critical turning point. The gain or loss of the resistance level at 158.00 will determine the direction choice in the short term. If the breakthrough is successful, 160.00 and 162.00 will become the next targets for bulls and may strengthen market confidence in the long-term upward trend. However, if the price is blocked around 158.00 and begins to rebound, it may further test support areas such as 157.15 and 155.00, and even threaten the medium-term bullish structure.