Published: 26 December 2025,06:50
Daily Market Analysis New
Key Takeaways:
*BOJ rate hike fails to lift yen, reflecting structural weakness.
*Uncertainty over future tightening and potential currency interventions keeps traders cautious.
Market Summary:
The Japanese yen edged lower sharply despite the Bank of Japan’s recent interest rate hike, underscoring the persistent structural weakness of the currency. Even with the policy tightening, market confidence in the yen remains subdued, leaving it under pressure against major currencies.
The yen had briefly strengthened past 140 per dollar in April but lost momentum amid uncertainty over U.S. President Donald Trump’s tariff policies and rising fiscal risks stemming from domestic political shifts.
Some analysts maintain a longer-term bullish view for the yen as the BOJ continues its gradual policy normalization. However, uncertainties remain over the pace of further tightening and potential currency interventions, making it difficult for traders to gauge whether the yen will receive sustainable support. Market participants are advised to closely monitor developments for actionable signals.
Meanwhile, Japan’s stock market tells a contrasting story. The year-end rally has lifted Tokyo’s benchmark Topix index by about 23% in 2025, weathering tariff shocks, two BOJ rate hikes, and a change in prime minister. Strategists attribute the outperformance to Prime Minister Sanae Takaichi’s aggressive fiscal policies, setting the stage for further gains in 2026. The weaker yen is also providing a tailwind for exporters, particularly automakers and trading houses, enhancing Japan’s equity market appeal.
Technical Analysis
USD/JPY is trading sideways, consolidating near the 156.45–156.50 resistance zone as the pair awaits fresh market catalysts. Technical indicators suggest a mild upside bias: the MACD is showing diminishing bearish momentum and forming a golden cross, while the RSI hovers around 51 and is turning higher.
If the pair breaks decisively above the resistance, USD/JPY could extend gains toward 157.60. Conversely, failure to sustain bullish momentum may prompt a retracement toward the 154.60 support level, keeping the short-term trend under close observation.
Resistance Levels: 156.45, 157.60
Support Levels: 154.60, 152.95
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