USD/JPY heads into the new week at a pivotal juncture, with price action still elevated but increasingly vulnerable to a policy-driven inflection. The macro backdrop is dominated by a high-impact central bank cluster, where shifting expectations around Fed easing and potential BoJ normalization are tightening the rate-differential narrative that has supported USD/JPY for much of the cycle. With U.S. yields stabilizing near recent highs and risk sentiment sensitive to policy guidance, the pair is set up for a decisive move as markets reprice the next phase of the U.S. – Japan divergence story. Against this backdrop, we focus on an A+ short bias that aligns fundamentals, technical structure, and sentiment into a single high-conviction expression. USDJPY Trade Setup: Pair / Asset Bias & Entries Stop / Invalidation Targets Why A+ (fundamentals, Technicals, Sentiment) Near-term catalysts (UK time) USDJPY SHORT – Bearish. T1) Sell rallies 156.40 – 156.90. T2) Add on clean break <155.40. Above 157.60 (or daily close back above 157.30). 154.80, 153.90, stretch 152.50 if BoJ delivers and Fed is not “hawkish-cut”. Fundamentals: Strongest divergence of the week: market leaning to a Fed cut while the BoJ is widely expected to hike toward 0.75%; this narrows rate differentials and supports JPY. Technicals: Pair is heavy and vulnerable to a “lower-high → break” sequence into major event risk (use your multi-TF levels; the 155.5 / 155.0 zone is the pivotal shelf). Sentiment: JPY speculative positioning is already net long, suggesting the market is positioned for JPY strength—often a sign that any “no-hike” surprise would be violent, but baseline still favors JPY bid into/after the meetings. Wed 10 Dec: BoC & Fed decisions and Fed presser (19:00 – 20:30). BoJ hike expectations remain central this week. Chart by TradingView – USDJPY Trade Setup -9th Dec Conclusion Our USD/JPY short setup remains the cleanest A+ expression of this week’s macro theme: narrowing U.S.-Japan policy divergence and rising odds of a deeper corrective phase if the BoJ delivers while the Fed signals a clearer easing path. Technically, the pair appears primed for a lower-high-to-breakdown sequence, making rallies attractive for risk-defined positioning, while a decisive loss of nearby supports would confirm momentum and open the door to deeper targets. As always in event-heavy weeks, execution discipline matters as much as direction, respect the invalidation, manage size through the policy headlines, and look for post-decision confirmation to reinforce the broader bearish thesis. 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...
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