USD/JPY: 5-Day JPY Weakness Has Reached an Inflection Point for Potential Reversal as FOMC Looms

Key takeaways

• AUD is leading the FX space on renewed RBA hawkishness, while the JPY remains the weakest major currency as BoJ signals flexibility on policy.
• USD/JPY’s recent five-day rally is losing steam, with momentum indicators and resistance confluence pointing to a potential minor bearish reversal.
• A break below 156.00 on the USD/JPY could open the way toward 155.35 and 154.40, while a move above 157.15 would negate the downside setup.

In the FX market, a “K-shaped” performance has emerged with the AUD rallying and outperforming among the major currencies against the US dollar due to the hawkish monetary policy guidance from the Australian central bank, RBA. In today’s Asia session, AUD extended its gains by 0.1% after a 0.3% return seen on Tuesday, 9 December, towards a three-month high at 0.6650 (see Fig. 1).

Fig. 1: 5-day rolling performance of the US dollar against major currencies as of 10 Dec 2025 (Source: TradingView)

At the end of the spectrum, the Japanese yen weakened for the third consecutive session against the greenback (USD/JPY rallied by 1% on a 5-day rolling basis) due to mixed messages from the Bank of Japan (BoJ) Governor Ueda’s speech on Tuesday, 9 December.

Ueda highlighted that the BoJ may ramp up government bond buying if long-term JGB yields rise rapidly, which appeared to be a signal that the BoJ is willing to tweak its existing policy after the BoJ ended its yield curve control programme in March 2024 that previously suppressed the rise in the 10-year JGB yield.

Interestingly, technical analysis suggests that the recent 5-day rally of the USD/JPY from its 154.40 minor swing low printed on 5 December 2025 has started to lose upside momentum that may lead to a potential minor bearish reversal on the USD/JPY.

Let’s unravel in greater detail.

Preferred trend bias (1-3 days) – Bearish with 156.00 as potential downside trigger

Fig. 2: USD/JPY major & medium-term trends as of 10 Dec 2025 (Source: TradingView)

Fig. 3: USD/JPY minor trend as of 10 Dec 2025 (Source: TradingView)

Watch the 157.15 key short-term pivotal resistance on the USD/JPY, and a break below 156.00 key near-term support (also the 20-day moving average) may trigger a minor bearish reversal to retest the next intermediate supports at 155.35 and 154.40.

A break and an hourly close below 154.40 may kickstart another minor downtrend sequence to expose 153.70 (also the 50-day moving average) next in the first step (see Fig. 3).

Key elements

• Tuesday, 9 December 2025’s rally on the USD/JPY ex-post BoJ Governor Ueda’s speech has stalled at the pull-back resistance of a former medium-term ascending support from 29 October 2025 low, the minor swing high area of 24 November 2025, and close to the 76.4% Fibonacci retracement of the prior minor downtrend from 20 November 2025 high to 5 December 2025 low, all confluence at the 157.15 level.
• The hourly RSI momentum indicator has just staged a bearish breakdown below a key ascending support after it exited from the overbought region (above 70). These observations suggest that the recent short-term upside momentum of the USD/JPY has eased.

Alternative trend bias (1 to 3 days)

A clearance above 157.15 invalidates the minor bearish reversal view for a further potential squeeze up for the next intermediate resistance to come in at 158.00/158.35.