USDJPY Trade Setup – 19th Dec

USD/JPY remains in focus heading into the European morning as markets digest the latest BoJ/Fed divergence and the behavior of US yields. With US 10-year yields holding near the low-4% area and the yen still highly sensitive to rate-differential swings, price action around the 156.00 – 156.30 region is especially important today. Our base case is that rallies into this resistance zone remain vulnerable to renewed JPY demand, particularly in thinner, pre-holiday liquidity where stop-runs can be sharp but short-lived. As such, we prefer a disciplined “sell-the-rally” approach rather than chasing intraday volatility. USDJPY Trade Setup: Pair Bias & Entries Stop / Invalidation Targets Why A+ (Fundamentals + Technicals + Sentiment) Near-term catalysts (UK time) USD/JPY   SHORT – Sell rallies 156.05 – 156.30 (preferred) or sell failure back below 155.90 after a spike 156.95 (above next resistance band) T1: 155.00 T2: 154.20  T3: 153.00 Fundamentals: BoJ hiked to 0.75% (30y high) and Ueda kept the door open to further normalization while noting weak JPY can add to inflation; at the same time, US CPI undershot (boosting Fed-cut expectations) = USD/JPY macro headwind.  Technicals: price is sitting in a well-flagged 156.00 – 156.30 resistance / prior highs area, clean location to fade.  Sentiment: JPY specs are still net long but have been trimming (less crowded), so a renewed JPY bid can run; today’s “yen dip after hike” is a classic sell-the-rally setup into resistance.  Fri 19th Dec: 15:00 – US Existing Home Sales & University of Michigan Sentiment Chart by TradingView – USDJPY Trade Setup – 19th Dec 2025 Conclusion In summary, USD/JPY offers a clean, high-conviction risk-reward profile only if the pair rejects the 156.00 – 156.30 supply area and fails to sustain trade above it. Our trade thesis is invalidated on a decisive break higher (above our stop/invalidation level), which would signal that yield support and USD demand are overwhelming the near-term JPY tailwinds. Until then, we remain biased to fade strength, targeting a move back toward 155.00 initially and potentially deeper if US yields soften further or risk sentiment deteriorates. As always, keep risk tight, respect the invalidation level, and be mindful of headline-driven spikes in a seasonally illiquid market. This analysis is for informational purposes only and does not constitute investment advice. Trading involves risk; manage exposure accordingly. For similar FX Trade Setups please visit our FX Trade Ideas page. Please visit our Disclaimer page. Disclaimer Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. TerraBullMarkets.com does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets or any financial instrument involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TerraBullMarkets.com nor any of its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page. TerraBullMarkets.com and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. TerraBullMarkets.com and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted. The author and TerraBullMarkets.com are not registered investment advisors and nothing in this article is intended to be investment advice. TerraBullMarkets...