Dollar-yen should not become complacent even with “holding the high,” beware, the current market is more about the “speed of collapse” than the “ability to extend”

USD/JPY remains at high levels but do not become complacent; the current market is more about the speed of a collapse than its room for growth】

The current USD/JPY market continues to maintain around high levels. With the backdrop of a high U.S. interest-rate environment and the U.S.-Japan interest-rate differential, the basic flow tends to be dollar buying and yen selling. However, looking at recent price action, there is a growing sense that it's not the same as the previous market where one could confidently buy dips.

In particular, recently even in an uptrend, momentum does not persist, and cases of rapid selling can intensify with only a small trigger. In other words, while the trend remains upward, inside the market the “fragility” is growing stronger at the same time.

A major underlying factor is vigilance against currency intervention by Japanese authorities. The 160-yen level remains strongly in focus, and there is a persistent view that intervention could occur again at this level. As a result, participants who buy at high levels aggressively have decreased, and consequently the upside momentum has weakened.

On the other hand, the dollar itself remains firm. In the United States, inflationary pressure has not fully eased, and the Fed remains cautious about aggressive rate cuts. This means U.S. rates are likely to stay high, and the interest-rate differential continues to support USD/JPY.

Therefore, USD/JPY is in a difficult state where it “cannot fall all the way” but is “not necessarily rising endlessly.”

Furthermore, Middle East tensions and swings in oil prices also unsettled the market. If oil prices rise, energy-importing countries like Japan face stronger inflationary pressure, which can be perceived as a yen-selling factor. At the same time, geopolitical risk rising can trigger “risk-off yen buying,” making the market less prone to move in a single direction.

Additionally, perceptions of the Bank of Japan are slightly unsettled. While recent BoJ meetings left policy rates unchanged, internally there are gradually increasing voices advocating rate hikes. However, considerations for the economy and vigilance toward overseas risks remain strong, and a sharp tightening move is not highly likely yet.

This balance of “expectation” and “cautious stance” is one of the factors turning the current USD/JPY into a more nerve-racking market.

In such an environment, what individual investors should pay attention to is“where the move might break down” rather than “how far it might extend.”

Recently, USD/JPY has shown more jagged movements—rapid rise → rapid fall → rise again—than a clean, one-way climb. Therefore, it is more important to keep position sizes small and take profits earlier than before, adopting flexible responses.

In particular, the early hours of the London and New York sessions see increased liquidity and larger price ranges, so opportunities come with higher risk as well. Instead of trying to capture everything, it may be more aligned with the market environment to target only easy-to-take opportunities.