Chasing Buys at the Top? USDJPY Is Sending a Risk WarningUSDJPY is entering a technical corrective pullback after an extended and aggressive rally. While the broader macro backdrop previously remained unfavorable for the Japanese yen, the market is no longer reacting strongly to USD-bullish headlines as it did before.
From a news perspective, the Japanese yen is expected to stay under pressure amid speculation that Prime Minister Sanae Takaichi may call for an early election in February. A potential victory is widely seen as supportive of expansionary fiscal policies, which would add further downside pressure on JPY. However, the key point is that most of this narrative has already been priced in , and USDJPY has rallied sharply in anticipation of that outcome.
Turning to the chart, the technical picture is flashing early warning signs . Price is approaching the key psychological resistance zone at 159.50–159.60, while simultaneously testing a long-term ascending trendline. At this level, buying momentum is clearly fading, with visible rejection signals suggesting that bulls are losing control.
In this environment, chasing long positions near the highs carries elevated risk . A more prudent approach is to wait for weak pullbacks and prioritize SELL setups in line with the corrective structure, rather than getting trapped by outdated headlines. Markets do not move because of news titles — they move because of how price reacts after the news is released.
