Introduction

The USD/JPY pair continues its decisive rally as yield differentials and diverging central bank policies drive capital toward the US dollar. Japan’s ultra-loose monetary stance contrasts sharply with the Federal Reserve’s firm higher-for-longer position. With the pair recently breaking above key resistance levels, both macro and technical signals suggest further upside momentum in the coming weeks.

Fundamental Analysis

The United States remains the macroeconomic outperformer among major economies. GDP growth at 3.8% and inflation near 3% give the Fed confidence to maintain elevated interest rates. Labour and consumer indicators show resilience, reinforcing dollar demand. In contrast, Japan faces persistent deflationary tendencies, weak domestic demand, and negligible wage growth. The Bank of Japan continues to suppress yields through yield-curve control, maintaining its ultra-accommodative stance. The resulting real yield gap heavily favours USD appreciation against JPY.

Sentiment Analysis

Sentiment data corroborate the bullish bias. Retail traders remain net short USD/JPY, while institutional positioning remains skewed toward dollar longs. The pair’s sentiment score of +28 reflects the persistent divergence in rate expectations and investor confidence in USD strength. Risk appetite remains neutral to positive, favouring continuation of carry trades that fund through the yen.

Technical Analysis

Technically, USD/JPY has broken above the Ichimoku cloud with both Tenkan and Kijun lines turning upward, supported by a bullish MACD crossover. RSI at 60.7 confirms firm momentum without overbought conditions. Rising volume adds conviction to the breakout above 149.75, opening the path toward 151.50–152.00 resistance. Support lies near 148.00, aligning with the top of the previous consolidation zone.

Conclusion

USD/JPY’s bullish alignment across macro, sentiment, and technical indicators suggests further gains remain likely. The widening policy divergence between the Federal Reserve and Bank of Japan reinforces dollar dominance. Unless BoJ signals policy tightening or the Fed pivots dovish, the pair’s upward trajectory toward 152.00 remains intact.