USDJPY breakout: Can the rally extend toward 155?The dollar-yen pair smashed through 150 with one of the strongest breakouts recently, confirming a new technical phase as it trades above the 61.8% Fib retracement. Here’s what’s fuelling the move and what traders should watch next:
Dollar strength returned as safe haven flows dominate, even with a US government shutdown, while Japan’s new prime minister’s dovish signals are sending the yen into freefall.
Key drivers
Safe haven flows : Investors seek shelter in the dollar as global uncertainty rises; DXY index hit a 6-week high.
Yield differentials : The Fed/BOJ spread powers further carry trade buying as Japanese rates remain ultra-low.
Japanese political shift : PM Takaichi’s win spurs fiscal stimulus and pushes back market hopes for BOJ tightening, deepening yen weakness.
Technical breakout : Clean break above multi-year resistance and 61.8% Fibonacci retracement; watch for support validation and continuation toward the next 78.6% Fib at 154.80.
What to watch
Holding above 150 and 61.8% Fib support sets the stage for a bullish continuation.
Profit taking is possible near 153.25–154.80, as RSI shows signs of overbought.
Tonight’s FOMC minutes, Thursday’s BoJ/Ueda speech, and political headlines could trigger sharp moves.
Cross-pair momentum : EURJPY at record highs, GBPJPY surging, confirming broad-based yen weakness.
The bulls are in control as long as USDJPY stays above 151.15–150.50. Pullbacks to support offer opportunities to buy dips, with 154.80 as the next bullish target. Keep stop losses disciplined, and don’t ignore the chance for sharp reversals if intervention or a dramatic shift in sentiment emerges.
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