Chart Alert: Japanese yen short squeeze risk,158.15 key USD/JPY trigger

[Ben Graham]

Key takeaways

• Intervention risk is rising: USD/JPY stalled near the 159.45–159.75 resistance zone, levels historically linked to BoJ intervention, triggering sharp yen volatility as officials escalated verbal warnings, including the possibility of joint US–Japan action.
• JPY short squeeze risk is elevated: Speculative positioning in JPY futures has fallen to a one-year low, signalling crowded bearish bets. Any sustained USD/JPY downside could force short covering and amplify yen strength.
• Near-term technical bias turning lower: Bullish momentum in USD/JPY is fading, with a break below 158.15 likely to trigger a minor bearish reversal toward 157.50–156.12, while only a decisive move above 159.75 would revive upside risk.

This is a follow-up analysis and an update of our prior report, “Chart Alert: USD/JPY breaking 158.80 key resistance as US CPI looms with intervention risk”, published on 13 January 2026.

The price actions of the USD/JPY have staged the expected push up and hit the lower limit of the first immediate resistance zone of 159.45/159.75 (printed an intraday high of 159.45 on Wednesday,14 January 2026. Coincidentally, it was also the same intraday high of 159.45 on 12 July 2024 that the Bank of Japan (BoJ) last intervened in the FX market to sell down the US dollar.

The Japanese yen has been the most volatile among major currencies in the last three trading sessions. The JPY hit an 18-month low against the greenback on Tuesday, 13 January 2026, at 159.17 per US dollar, despite a slew of verbal interventions from Japanese authorities at the start of this week.

USD/JPY K-shaped performance evaporated as intervention risk intensified

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Fig. 1: 5-day rolling performance of the US dollar against major currencies as of 16 Jan 2026 (Source: TradingView)

The “strongest form of verbal intervention” comes in today’s Asia session (Friday, 16 January 2026), where Japan’s Finance Minister Katayama reiterated Tokyo’s readiness to act against excessive yen moves and, for the first time this week, highlighted the possibility of a US-Japan joint intervention in the FX market ahead of a thinning liquidity environment today (ahead of the weekend as well as the closure of US stock market on next Monday, 19 January for Martin Luther King, Jr. Day).

The USD/JPY dropped by 0.4% to hit an intraday low of 157.95 and erased its earlier “K-shaped” performance in the FX market before it rebounded slightly to 158.20 at the time of writing (see Fig. 1).

JPY futures positioning points to the risk of a short squeeze

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Fig. 2: JPY futures large speculators net positions, excluding commercials net positions as of 6 Jan 2026 (Source: MacroMicro)

Based on the Commitment of Traders report compiled by the US Commodity Futures Trading Commission as of 6 January 2026, the number of large speculators’ net long positions in the JPY futures market, excluding commercials (hedgers) net positions, has declined to a 1-year low at 20,983 contracts (see Fig. 2).

Being a contrary opinion indicator, the positioning by large speculators in the JPY futures has skewed towards a significant degree of bearish bias on the JPY, and a minor bullish reversal in the price action of the JPY can amplify the risk of a short squeeze due to “JPY shorts” scrambling to exit in light of the intervention risk as highlighted above.

Let’s now highlight the short-term (1 to 3 days) trend bias and key technical levels to watch on the USD/JPY.

Bullish momentum is fading for USD/JPY, at risk of minor bearish reversal

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Fig. 3: USD/JPY minor trend as of 16 Jan 2026 (Source: TradingView)

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Fig. 4: USD/JPY major and medium-term trends as of 16 Jan 2026 (Source: TradingView)

The reintegration back below 158.30/158.35 on the USD/JPY, coupled with the bearish divergence condition and the bearish breakdown of its former parallel ascending support on the 1-hour RSI momentum indicator, suggests that a potential minor bearish reversal is brewing (see Fig. 3).

Watch the 159.45/159.75 short-term pivotal resistance on the USD/JPY. A break below 158.15 opens scope for a minor bearish reversal to expose the next intermediate supports at 157.50, 157.00 (20-day moving average), followed by 156.12 (50-day moving average).

On the other hand, a clearance above 159.75 invalidates the bearish scenario for a further squeeze up towards the next intermediate resistances at 160.24/160.35 and 161.00/161.10.

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