The US Dollar (USD) is expected to trade between 146.00 and 149.00 against the Japanese Yen (JPY). Analysts note that oversold conditions have not stabilised, indicating a potential drop below 145.00 is possible.
The USD increased by 0.64% to 147.84 amid soft trading before rebounding. Analysts suggest that the USD’s current phase is range-bound, and although it resisted dropping below 145.00, further declines remain possible.
Current Resistance Levels
Despite the rebound, analysts believe a breach of the strong resistance at 149.00 is essential for the USD to avoid further dips. The likelihood of breaking mid-term support at 143.50 is currently low.
This recent price behaviour suggests that the USD/JPY remains caught in a narrow band, hovering between buyers keen at current levels and sellers wary of overextension. The short-term rise to 147.84 was notably shallow in volume, indicating a lack of commitment behind the move. We’ve seen similar price patterns before—sharp movements without meaningful follow-through often crumble quickly under mild pressure.
Tanaka’s point about a possible drop below 145.00 shouldn’t be dismissed. When markets are leaning on technical oversold extremes without a concrete fundamental pivot, there’s typically a vacuum underneath. Add to that the lack of fresh macroeconomic triggers and it becomes easier to envision a slip rather than a sustained rally. It also tells us that risk appetite around this zone is drying up.
Derivatives Market Impact
From a derivatives standpoint, such stagnancy is where short-term premium strategies often come to life. With implied volatility staying compressed but skew favouring downside hedges, there’s a noticeable lean toward protecting against slippage rather than covering upward extensions. In this case, we might consider the way options open interest is clustering—particularly near the lower band of the projected range. That pattern hints at unease over a sudden unwind rather than confidence in a climb.
Choi’s view implies that until we see a decisive push through 149.00, the market may treat any bounce as temporary noise. This resistance behaves more like an aberration marker than a gateway. We’re expecting delta adjustments to follow price action closely, making directionality somewhat reactive rather than anticipatory. That could tilt gamma profiles sharply should 145.00 come into play in the next rotation.
What stands out the most is the reduced probability of breaching that deeper support around 143.50. A level that low sits comfortably outside the current expected move for weekly positioning. If that level activates, it’s less likely to be a gradual walk—more a drop-off tied to surprise catalysts or policy divergence. So while it’s not the base case, it shouldn’t be ignored entirely when shaping hedges.
Overall, in the coming sessions, focus must remain on option skew behaviour and the structure of weekly expiries. There’s no indication just yet that the current range will widen on its own. Attention should be paid less to direction and more to pace and dealer hedging flows, as these are likely to inform where intraday acceleration points might emerge, particularly around 145.00 and 149.00. Keep strategies dynamic, and lean into short-dated instruments where uncertainty can be boxed efficiently.
