Title: USD/JPY Struggles to Sustain Gains: In-Depth Analysis – December 31, 2025
Source: Economies.com | Original Author: Economies.com Analysis Team
The USD/JPY currency pair is facing challenges in maintaining its recent gains as market activity nears the end of 2025. Despite slight positive momentum observed earlier, the price action reveals signs of consolidation within a critical range, indicating that bullish control may be weakening. This article breaks down the current technical landscape for the USD/JPY, highlighting key support and resistance levels, likely scenarios ahead, and the broader implications for traders as we enter 2026.
Overview of Current Price Behavior
The USD/JPY pair experienced a modest recovery during previous sessions but now shows signs of hesitancy. According to the latest chart readings:
– The current price action is hovering near 141.50, just below a recent resistance level
– Price has tested new highs in recent sessions but failed to maintain upward momentum
– Momentum indicators suggest a divergence, which could imply weakening bullish strength
This type of movement hints at a potential correction or sideways price action in the short term. Investors and analysts are growing cautious, as the pair’s inability to break higher may open the door to renewed selling pressure.
Technical Indicators: Assessing Momentum and Trend Strength
A closer look at the primary technical indicators provides deeper insight into USD/JPY’s next potential move:
RSI (Relative Strength Index)
The RSI is currently just under 60, signaling mild bullish momentum but not strong enough to confirm a solid upward trend. Historically, resistance near the 60-level on the RSI has acted as a tipping point for potential downturns.
MACD (Moving Average Convergence Divergence)
The MACD histogram is flattening, with decreasing positive momentum. While the MACD line is still above the signal line, the gap is narrowing. This weakening signal suggests that bulls may be losing control and that a crossover could occur soon, which would support a bearish scenario.
Moving Averages
– The 50-day SMA is trending above the 100-day SMA, reflecting overall positive sentiment in the medium term
– However, recent price action is struggling to maintain above the 50-day SMA, which is acting as dynamic resistance
– The pair’s failure to hold gains over this average may increase the likelihood of a retest of the 100-day SMA near 139.75 as a short-term support
Fibonacci Retracement and Key Price Levels
Recent highs and lows suggest key Fibonacci retracement levels are likely to influence price behavior heading into the new year:
– 23.6% Fibonacci: Located near 140.80, currently acting as immediate support
– 38.2% Fibonacci: Found at 139.20, could act as the next support level in case of strong selling pressure
– 61.8% Fibonacci: Near 137.40, viewed as a critical medium-term support threshold
As price consolidates between 140.80 and 141.50, traders should monitor for either a breakout or breakdown to signal further direction.
Support and Resistance Levels to Watch
Short-Term Resistance:
– 141.60: A near-term barrier, as the pair has tested but not closed above this level in recent sessions
– 142.30: A higher resistance formed from previous swing highs
– 143.20: This level aligns with long-term resistance zones and remains a key upside barrier
Immediate Supports:
– 140.80: Current support, as noted from recent price lows
– 139.75: Coincides with rising 100-day SMA, bolstering its reliability
– 138.60: More distant support indicative of reversal risk if bearish sentiment accelerates
Trend Analysis and Market Sentiment
Despite upward attempts, the lack of strong buying power reflects underlying market caution. This phase of price uncertainty is mirrored across risk assets as the year ends:
– The USD has
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