The USDJPY is getting squeezed higher, with the pair climbing to a new cycle high of 161.76. While that is the highest level since 2024, it is now closing in on the 2024 high at 161.919. A move above that level would put the pair at its highest level since 1986.
The rally is increasingly taking on the characteristics of a short squeeze. Recall that in late April and early May, intervention fears sparked a sharp decline from 160.717 to a low near 155.017, as traders worried Japanese officials would step in aggressively to support the yen. Since then, the pair has steadily recovered, but traders remained cautious about pushing above the 2026 highs given the lingering threat of intervention.
That caution disappeared today.
The break to new highs has accelerated the upside momentum as short positions are being forced to reassess the long-held belief that Japanese authorities would not tolerate USDJPY trading above 160.00 for an extended period. While the risk of intervention remains and officials could still attempt to push the pair lower, the market is now nearly 200 pips above 160.00. At some point, traders fighting the trend have to decide whether it is worth staying in the trade and not screaming “Uncle”. “Basta”, “Enough”, “Get me OUT”.
For many shorts, that moment may be arriving quickly. The market is forcing them to ask a simple question: How much longer do you want to fight a trend that keeps making new highs?
