[USD/JPY cannot be assured even with “holding high”; now is the stage to focus not on the momentum but on how it breaks down]

【USD/JPY: It’s not safe to assume a high level can be maintained; now the focus is on how it may break down, not just whether it rises or falls】

The current USD/JPY market continues to stay in a high range, but the atmosphere has begun to feel somewhat different from a previous “strong upward trend.” Previously, even if prices pulled back, they were quickly bought back, but recently the pace of the rebound has slowed, and there have been more episodes of sharp selling. In other words, the market is entering a phase where it is not only about whether it goes up or down, but also about how it breaks down.

Behind this is, of course, vigilance regarding currency intervention. The 160 yen level is strongly in focus in the market, and there is a persistent view that Japanese authorities may intervene to buy yen at that price level. As a result, participants who previously chased highs with confidence are diminishing, and the market tends to be pressured on the upside as a consequence.

However, the very foundation supporting USD/JPY has not collapsed. In the United States, vigilance against inflation remains, and there is a strong view that the Fed cannot move easily toward substantial rate cuts. In other words, U.S. interest rates are likely to stay high, and the interest-rate differential between the U.S. and Japan continues to support dollar buying and yen selling.

Moreover, developments in Middle East geopolitical tensions and oil prices also add volatility to the market. When crude prices rise, price pressures tend to intensify for resource-importing countries like Japan, which can be seen as a factor supporting yen selling. Conversely, when geopolitical risk rises, the yen can be bought as a safe asset, so the same factor can have different market reactions. The current USD/JPY is not a simple one-factor market moving on a single theme; multiple factors are intertwining, making the situation very complex.

In addition, market perceptions of the Bank of Japan are subtly changing. Although the most recent BOJ meeting left policy rates unchanged, internally there is a growing number of voices supporting a hike, and the market is starting to search for “when will the next move occur.” However, due to considerations for the economy and overseas risks, a rapid policy change is still not highly likely. This balance of “expectation and caution” makes the market’s direction harder to discern.

What individual investors should focus on in such an environment is not a simple mindset of “buy because it’s still rising” or “sell because it has fallen,” butseeing the very change in price movements. In particular, recently even during uptrends there can be sharp retracements, increasing the importance of position management compared with before.

Nowadays, rather than holding a long position for a long time, it may be more practical to concentrate on times when price action tends to be active, such as the London or early New York sessions, adopting a “take profits when it runs” mindset. Also, around key economic indicators and speeches by important figures, movements often swing significantly in both directions, so a flexible approach of “take opportunities as they arise” is necessary.

The current USD/JPY, while maintaining strength, also carries fragility. Therefore, now more than the trend’s direction, whether you can sense a change in market quality is likely to be a decisive factor influencing trading results.