【Dollar/JPY is “strong yet unstable,” what the current market demands is “the courage not to chase.”】

【USD/JPY is “strong but unstable,” what the current market demands is “the courage not to chase”】

The current USD/JPY market, while staying in the high range, has become noticeably more nervous in its price movements than before. Until recently, the flow of “when it dips, it’s bought” was very strong, and trend-following was easier to implement. However, recently, even when it rises, the momentum does not continue, and when selling does occur once, it tends to collapse sharply in a short period of time.

In other words, USD/JPY today is a “strong market,” but it is no longer a “stable uptrend.”

A major factor behind this is the heightened caution toward intervention in the currency market. The 160 yen level is strongly perceived by the market, and there remains a strong belief that Japanese authorities may again intervene to buy yen at this level. As a result, participants actively chasing highs have decreased, and consequently up-moves tend to be weighed down.

On the other hand, the dollar itself remains firm. Inflation in the United States is not easily contained, and the Federal Reserve remains cautious about rapid rate cuts. In other words, U.S. interest rates are likely to stay high, making the interest-rate differential between Japan and the U.S. a environment conducive to dollar buying and yen selling.

Therefore, USD/JPY cannot become a “continuously falling market,” and as a result, it remains a volatile and uncertain environment prone to swings both up and down.

Furthermore, Middle East tensions and movements in crude oil prices cannot be ignored. Higher oil prices tend to raise import costs for Japan, and can be perceived as a factor for yen selling. At the same time, geopolitical risks can intensify demand for the yen as a safe asset, leading to inconsistent market reactions even to the same factor.

In short, the current USD/JPY is not a simple market driven by a single theme, but one in which multiple factors are constantly colliding.

Additionally, the perception of the Bank of Japan is changing subtly. Although the latest BOJ meeting kept policy rates unchanged, internally there are increasing voices in favor of tightening, and the market has begun to seek “when will the next move be.” However, considering the economy and overseas risks, the likelihood of rapid monetary tightening remains low.

This balance of “expectation” and “cautious stance” makes the current USD/JPY market more difficult.

What individual investors should be aware of in such an environment isnot “jump in because it’s rising,” but to have the courage not to chase.

The recent market has tended to move in rough bursts, with sharp rises followed by sharp declines and retracements, rather than continuing in one direction. Therefore, it has become more important to keep position sizes smaller and to take profits earlier than before, showing flexibility.

Especially during the opening hours of the London and New York markets when liquidity is higher, price moves can accelerate rapidly, bringing both opportunities and higher risks. Now, rather than trying to take everything, it might be more in line with the market to target only easily exploitable moments.

The current USD/JPY is not so much about direction as about how well one can adapt to “rough price moves.” Therefore, now more than ever, stepping back and calmly observing the flow may lead to more stable trading outcomes.