Over the past 24 to 48 hours, the USD/JPY currency pair has exhibited notable volatility, climbing to a two-week high near 157, up from yesterday’s close at 156.725. Market attention remains sharply focused on the upcoming Japanese general election and the uncertainty it brings to the financial markets. According to the latest market news, polls showing a landslide victory for Japan’s Liberal Democratic Party (LDP) have pushed expectations of further yen weakness, driving USD/JPY higher.

Meanwhile, the broader Asia FX market has experienced downward pressure as the U.S. dollar strengthens ahead of major central bank meetings. The yen, often a hedge in times of political risk, has seen some position adjustments but faces downward pressure given widening interest rate differentials. Additionally, movements in Japanese Government Bond (JGB) yields reflect investor sensitivity to potential policy shifts, especially alongside fluctuations in U.S. Treasury yields.

For the average investor, this means increased USD/JPY volatility is likely as politics and central bank expectations continue to influence price action. If the LDP maintains a solid majority, the yen is expected to remain under pressure, with USD/JPY potentially pushing toward higher levels in the near term.

Daily Chart

The daily chart shows an ongoing uptrend for USDJPY since late 2025, with prices holding above both the 50-day and 200-day moving averages, signaling strong bullish momentum. Price action has faced resistance near 157, creating a short-term consolidation zone. The Bollinger Bands are widening, indicating increased volatility. MACD remains above the zero line, although histogram bars have been contracting, pointing to a slight slowdown in bullish momentum in the short term.

1H Chart

In the past 3-5 days on the hourly chart, USDJPY has moved steadily from around 155, breaking above several short-term moving averages and testing the 157 psychological level. Bollinger Bands show slight expansion, reflecting higher volatility. The MACD recently formed a bullish crossover, supporting short-term upside momentum. A notable Morning Star candlestick pattern suggests a potential short-term pullback or consolidation within the next 24 hours, so monitoring the reaction around 157 resistance is crucial.

Technical Trend:  Trend Direction: Cautiously Bullish with heightened volatility due to election uncertainties; traders should watch key resistance closely.

Technically, USDJPY is in a cautious bullish stance, with price oscillating between 156.50 and 157.00. The recent MACD bullish crossover provides signals for possible upward momentum continuation. A confirmed break above 157 could open the path toward 158.00 resistance. The daily Bollinger Bands expanding along with the 50-day moving average support indicates a higher probability of a sustained rally after short-term consolidation. The appearance of a Morning Star and bullish hammer candles on short-term charts point to a likely rebound after minor pullbacks, favoring long entries near support areas.

Today’s key economic release relevant to USDJPY is Japan’s December Household Spending data, which showed a year-over-year decline of -2.6%, significantly below the expected 0.1% growth. Weak consumption data may further weigh on the Yen. European industrial and trade data are scheduled but unlikely to directly influence USDJPY. Later US data, including consumer sentiment and credit, may impact USD strength. Overall, no immediate clear direct economic event today is expected to cause sharp USDJPY moves, but Japan’s weak spending data could sustain Yen pressure.

Resistance & Support

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