On Friday of last week (January 9) the USDJPY saw expectations for Fed rate cuts fade following the December U.S. employment report, while yen selling intensified after reports emerged that Prime Minister Takaichi is considering dissolving the Lower House. The pair hit a high of 158.18 yen shortly after GMT 14:00, and trading for the day closed at 157.88 yen for the week.

Today the USDJPY opened with a gap up at 158.07 yen and reached 158.20 yen around GMT 00:00 while the Tokyo market was closed. However, dollar selling emerged following the criminal referral against Fed Chair Jerome Powell, pushing the pair down to 157.51 yen around GMT 01:00. As of GMT 04:00, the pair is approaching the 158.20-yen range again.

Looking at the 1-hour chart of the USDJPY (as of GMT 04:30 on January 12), despite the drop to 157.51 yen, the pair continues to form higher lows. There appears to be resistance near 158.20 yen, and a break above this level could trigger further upside momentum.

(20-period Bollinger Band, showing ±1 and ±2 standard deviations)

Today, no closely watched economic indicators are scheduled for release.