USD/JPY Technical Setup: Navigating Within an Ascending Triangle Framework

Market Overview and Policy Drivers

The USD/JPY currency pair remains locked in a fascinating dynamic as conflicting forces shape its near-term trajectory. The Japanese Yen has gained ground during Monday’s European session, pushing the pair down toward 156.70 amid renewed hawkish commentary from Bank of Japan Governor Kazuo Ueda. The central bank official signaled confidence in sustained wage and price growth, stating that “wages and prices are highly likely to rise together moderately,” while reaffirming the BoJ’s commitment to continued rate increases should economic conditions align with forecasts.

Countering the Yen’s strength is renewed safe-haven demand for the US Dollar, triggered by geopolitical tensions involving US actions toward Venezuela. The US Dollar Index (DXY), a measure of the Greenback against six major currencies, has climbed 0.15% to trade near 98.60, reflecting this broader dollar resilience despite USD/JPY’s pullback.

Technical Landscape: The Ascending Triangle Pattern

From a technical perspective, USD/JPY presents a compelling ascending triangle formation that deserves careful monitoring. The pair currently trades at 156.74, maintaining a position above its 20-day Exponential Moving Average (EMA) at 156.26—a level that continues to slope upward and reinforce the underlying bullish narrative. The Relative Strength Index (RSI) stands at 55.99, sitting comfortably above the 50 midline, indicating steady directional momentum without overbought conditions.

Support remains anchored by a rising trend line extending from the 154.39 level, with immediate support noted near 156.56. A daily close below this critical juncture would invalidate the ascending triangle structure and potentially trigger a deeper correction toward December’s low of 154.35. On the upside, a decisive break above November’s high of 157.90 could pave the way toward the psychological 160.00 barrier.

What’s Next?

Investors will keep a close eye on Monday’s US ISM Manufacturing PMI data for December, scheduled for release at 15:00 GMT. This economic indicator could provide fresh directional catalyst for the pair as it navigates within its ascending pattern.