USDJPY (UJ) Fundamental + Technical Analysis - 03/12/2025

Table of Contents

1. Introduction
2. Fundamental Snapshot
3. Technical Breakdown
4. Conclusion

Introduction

USDJPY has entered a critical phase as the long-standing policy divergence between the Federal Reserve and the Bank of Japan begins to shift.
What has been a dominant bullish trend for months is now showing early signs of exhaustion, driven by a sharp repricing of U.S. monetary expectations and renewed anticipation of Japanese tightening.
As markets prepare for December’s major policy meetings, the pair is setting up for one of the most important inflection points of the year.

Fundamental Snapshot

USDJPY remains highly volatile as traders rebalance expectations around both central banks

• The Federal Reserve has taken a dovish turn recently, with markets now pricing a December rate cut with over 85% probability, a dramatic increase from the 34% expectation seen just weeks prior.
• The BoJ is signalling that policy normalization is finally approaching, with markets anticipating a potential hike toward its 1% neutral level.
  After the yen hit multi-decade lows, profit-taking from dollar bulls and renewed buyer interest around discounted yen levels, these forces are generating a meaningful bearish bias for USDJPY into year-end.

Technical Breakdown

Although the broader long-term structure remains bullish, the intraday landscape has turned clearly bearish.
Both the H4 and H1 timeframes show a firm transition into a lower-low and lower-high pattern, signalling momentum loss and growing selling pressure.
Price currently sits below the key zone around 155.7, which has now flipped into a decisive resistance point:

• Any retest of 155.7. or a slightly deeper correction into 155.8, may act as an attractive area for sellers to re-enter if the bearish structure holds.

As long as price remains beneath these regions, downward continuation remains the path of least resistance, especially if additional U.S. data reinforces ongoing dollar weakness in the coming days.

Conclusion

Overall, USDJPY leans into a short-term bearish phase as markets align more firmly with the prospect of Federal Reserve easing while simultaneously anticipating BoJ normalization.
The pair remains highly reactive, and traders may find more reliable opportunities by focusing on selling rallies into key resistance zones rather than chasing lows. The macro landscape favors yen strength for now, but the next wave of data will determine whether this shift becomes a sustained trend or merely a corrective phase.