USD/JPY edged higher on Wednesday, settling near the top of its 157.90-158.55 range as the U.S. Treasury curve steepened and demand for the dollar persisted. The greenback gained traction after reports of potential executive tariff actions from President-elect Trump, though yen crosses struggled amid reduced risk-taking due to rising global bond yields. Investors are closely watching key technical levels, particularly resistance at 158.85, the July 16 high, which could serve as a catalyst for further upside if breached.

Technical analysis highlights critical levels for USD/JPY. Resistance at 158.85 remains pivotal, with a break above potentially paving the way toward the psychologically significant 160 mark. Near-term support is seen at 158.09 (December high) and 157.80 (December 19 high), with a sustained move below these levels likely to signal a retracement. Rising vols and gamma demand ahead of key events, including Thursday’s BOJ regional report and Friday’s U.S. jobs data, suggest the market is preparing for heightened volatility.

USD/JPY’s direction hinges on upcoming data and policy signals. Expectations for U.S. yields to rise further as Trump’s policies take shape continue to support the pair, but intervention risks loom if USD/JPY approaches 160. Meanwhile, speculation about a potential BOJ rate hike in January, currently priced at 48% odds, and insights from Japan’s overtime pay data could influence yen sentiment. Friday’s U.S. jobs report will be critical, as a robust print could further widen rate differentials, pushing USD/JPY higher, while weaker data may cap gains and spark a pullback. For now, USD/JPY remains poised near resistance, awaiting key drivers for its next move.