USD/JPY Pulls Back to 155.65 — Healthy Correction or Trend Reversal?

USD/JPY has slipped to 155.65, extending its pullback from last week’s highs near 158 as bullish momentum cools and the RSI rolls over. While the broader uptrend remains intact, the pair is showing its first signs of exhaustion in weeks. Traders are now watching whether this is a normal dip within a strong uptrend — or the beginning of a deeper correction.

Technical Outlook: Trend Intact, Momentum Cooling

USD/JPY remains above key support levels, but momentum indicators are clearly softening:

• Price is still above the 15-day (155.91) and 20-day (155.38) moving averages — keeping the short-term trend technically bullish.
• However, both moving averages have flattened, showing the uptrend is pausing rather than accelerating.
• The RSI (14) at 56.20 has declined from near-overbought levels, confirming a loss of bullish intensity.

Price action shows controlled selling, not panic — a hallmark of a healthy retracement within an uptrend.

Macro Drivers: A Pause After a Strong US Dollar Run

The USD/JPY pullback is driven by a mix of global macro shifts:

US Dollar Side

• US yields have pulled back slightly, reducing upward pressure on the pair.
• The US dollar is cooling across major pairs after weeks of strength.
• Traders are reassessing the Fed’s next moves as data softens.

Yen Side

• The yen is gaining mild support as speculation grows that the Bank of Japan may adjust policy in early 2025.
• Short-covering from large institutional players has added temporary yen strength.

Despite this, the broader macro picture remains USD-favourable, especially with rate differentials still heavily in the US dollar’s favour.

Key Technical Levels to Watch

A bounce from 155.40 would confirm the uptrend remains healthy.

A move below 154.80 would break support and open the door to 152.80, signalling a deeper correction phase.

Sentiment Check: Bulls Still in Charge — But Cautious

• Long positions remain elevated among trend-followers
• Options markets show reduced appetite for near-term USD/JPY calls
• Some traders are taking profit after the massive multi-week rally

Sentiment still favours the upside — but with more caution in the air.

USD/JPY is undergoing a normal pullback, not a confirmed trend reversal.

As long as the pair holds above 155.40, the uptrend remains intact, and buyers may soon re-enter. A breakout above 156.50 would confirm renewed bullish momentum.

Bullish Scenario: Bounce above 155.40 → Retest 156.50 → 157.80 next

Bearish Scenario: Break below 154.80 → Deeper correction toward 152.80