Path Cleared for USD/JPY to Revisit 2024 High Amid Post-Election Dollar Demand

USD/JPY has seen a clear path emerge toward its 2024 high of 161.96 as dollar demand intensifies post-election. The anticipated Federal Reserve rate cut this week has prompted some profit-taking, but the bullish sentiment remains strong. The speed of USD/JPY’s climb, one of the sharpest since 2020, is a concern for Japanese authorities, though intervention risks appear muted with option convexity and short yen positions at relatively low levels. Businesses in Japan also seem less sensitive to import costs at current levels, which decreases the probability of immediate intervention.

On the technical side, USD/JPY’s bullish momentum is reinforced as the pair consolidates above key levels, with potential resistance near 155. Should USD/JPY surpass this threshold, it may accelerate toward its yearly high. Support levels include the October 21 high of 150.58 and October 4 high of 149.01, both crucial for preserving the current uptrend. A sustained break below these levels would shift sentiment, potentially signaling a trend reversal, though that scenario remains less likely given the broader dollar strength.

Looking ahead, the strategy appears to favor buying USD/JPY dips as the dollar remains well-supported by both seasonal trends and recent U.S. election outcomes. A return to U.S. “exceptionalism” could bolster the greenback further, while yen weakness may prompt renewed speculation on BoJ policy changes as political stability improves. Until a break below 150.58, the USD/JPY bias remains bullish, with only periodic corrections anticipated along the way as intervention risks hover in the background.