Momentum Signals Remain Bullish
The 14-day Relative Strength Index (RSI) was in the high 60s, pointing to strong upward momentum. It was not yet at an extreme overbought level. Price tested 159.75, the highest level since July 2024, reached on 13 March. The next level was the top of the channel near 161.30. A break above the channel could open a move towards 162.00, the all-time high from July 2024. On the downside, first support was near 158.55 at the channel base and the nine-day EMA. If price falls below that area, momentum could weaken and bring 156.44, the medium-term average, into view. The technical analysis in the report used an AI tool.Options Strategy And Key Risks
The USD/JPY pair is holding strong near 159.60, reflecting a persistent bullish sentiment. We’re seeing this strength because recent US inflation and jobs data for February 2026 came in hotter than expected, suggesting the Federal Reserve will keep interest rates high. In contrast, the Bank of Japan remains cautious, having only made minor adjustments since ending negative rates back in 2024, which keeps the yen weak. For derivative traders, this points toward buying call options to capitalize on the upward momentum. We are looking at strike prices near the 161.30 channel resistance or even the historic 162.00 high that was recorded back in July 2024. Options with expirations in late April or May 2026 could provide enough time for these levels to be tested. However, we must be cautious as the pair approaches levels that prompted verbal warnings from Japanese officials throughout 2024 and 2025. The risk of sudden intervention to strengthen the yen makes outright long positions risky and increases the cost of options due to higher implied volatility. A bull call spread, such as buying a 160.00 call and selling a 162.00 call, could be a prudent way to capture upside while limiting cost and defining risk. We should also prepare for a potential pullback if the pair breaks below the key support confluence around 158.55. Such a move could be triggered by any surprise shift in Bank of Japan commentary or weaker-than-expected US economic figures. In that case, buying put options with a strike price around 158.00 would offer a hedge or a way to profit from a reversal towards the 156.50 area. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
