By Sophie Lindqvist

USD/JPY, the exchange rate between the US dollar and Japanese yen, trades above ¥159 and presses toward ¥160, putting the late-July high around ¥164 back within technical reach. The move has strengthened a bullish technical case, but the break remains unconfirmed.

Michael J. Kramer, founder of Mott Capital Management, says: “If the breakout holds and momentum continues to build, projections based on the two bullish technical patterns suggest that USD/JPY could return to the highs seen in late July, around ¥164.” The case rests on chart momentum, not official guidance.

A hotter-than-expected US consumer price index (CPI) report on 11 November supplied the immediate catalyst. CPI measures changes in consumer prices. USD/JPY now sits at the upper end of its trading range since late September.

The technical case rests on three signals supporting a breakout, meaning a sustained move beyond the established range. Each offers support, but none guarantees the projected move.

• Price trades above ¥159 and challenges ¥160, a level that would confirm the prospective breakout.
• The relative strength index (RSI), a momentum gauge, has broken out of a resistance zone, or prior price barrier, by crossing above 58 and reaching 61. It can build further before 70, the conventional overbought threshold associated with stretched momentum.
• USD/JPY has broken above its 200-day moving average, the average price over the prior 200 trading sessions. The analysis treats the break as another bullish sign, although a break can fail.

Price action also resembles either a cup and handle or a bull flag, two formations that can extend an upward trend. A cup and handle comprises a rounded rise and smaller pullback; a bull flag comprises a brief pause against a rising trend.

Kramer does not determine which form is developing, so the diagnosis remains provisional. If the breakout holds and momentum continues, projections from those patterns place USD/JPY at the highs recorded in late July, around ¥164. That is a conditional chart target, not a commitment or consensus forecast.

A sustained move toward ¥164 would likely increase pressure on the Bank of Japan to raise interest rates at its next policy meeting in December. Japanese government officials might also renew talk of intervention in the currency market to curb any further rise in USD/JPY.

Such talk would signal that the yen was weakening against the dollar. The analysis records no official commitment to hike or intervene, leaving both policy responses conditional on a sustained currency move.

Kramer's downside scenario is equally direct: “If the breakout fails, USD/JPY would likely fall back towards support around ¥157.” That level sits at the lower end of the recent range and marks an area where buyers previously appeared. A failure at ¥160 would weaken the immediate breakout case, even if the broader advance had gained momentum.

What does this change for traders and policymakers?

The practical change is a three-level decision map: ¥160 for breakout confirmation, ¥164 for the projected late-July high, and ¥157 for failure and support. Traders can monitor those thresholds against the move following the November 11 CPI report, but the chart cannot establish which path will occur.

The RSI at 61 and the break above the 200-day average strengthen the upside case. The unresolved chart pattern and the test at ¥160 prevent treating ¥164 as confirmed.

For policymakers, a sustained move toward ¥164 would sharpen the rate debate and could revive intervention talk around the December meeting. Technical analysis cannot determine the Bank of Japan's decision or whether officials will intervene, so the defensible conclusion remains conditional.

CMC Markets identifies itself as an execution-only service provider, meaning it handles transactions rather than offers advice, and limits the analysis to general information purposes. It says the material does not consider personal circumstances or objectives, and readers should not rely on it as financial, investment or other advice.

CMC also says no opinion in the material constitutes a recommendation by the company or Kramer for any person, security, transaction or strategy. The company says it did not prepare the work under legal requirements designed to promote independent investment research. Although CMC is not specifically barred from dealing before publication, it says it does not seek to take advantage of the material beforehand.