USD/JPY Price Forecast - USDJPY=X Tests 155.0 After Hawkish Fed Minutes as Market Watches Japan CPI

USD/JPY – price sits around 155.00 after a sharp dollar repricing

USD/JPY is trading just under 155.00, after a move that added roughly 0.8–1.0% in a single session and pushed the pair to a six-day high around 154.5–155.0. The move comes on top of a rebound from the January low that followed the spike to 159.45, leaving the pair back in a high-altitude zone where the previous swing high at 157.66 and the psychological 160.00 level dominate the technical map. The price is now testing the 155.00 barrier that many desks treat as the gateway to a fresh leg toward 158.00–160.00, but it is doing so in an environment where policy makers on both sides have already signalled discomfort with further sustained yen weakness.

**Fed minutes, US data and yield backdrop powering USD/JPY

The immediate catalyst for the latest leg higher in USD/JPY was the January policy minutes from the Federal Reserve. Several officials explicitly kept the door open to further tightening if inflation stays sticky, even as the broader discussion still revolves around when to cut rates later in 2026. That shift back toward a “two-way” policy discussion lifted US yields again, with the 2-year moving up to roughly 3.47% and the 10-year around 4.087%. Equity indices in the US initially rallied more than 1% on the day but surrendered a chunk of those gains once the minutes hit, underlining that the rate path is still the dominant driver. The hard data reinforced the message. Weekly initial jobless claims fell to 206K versus a 225K consensus and a prior reading of 229K, while the Philadelphia manufacturing index jumped to 16.3 from 12.6 against expectations near 8.5. That combination of tight labour conditions and resilient activity justifies a higher-for-longer Fed stance in the near term and explains why the Dollar Index has pushed toward the 97.8–98.0 band. For USD/JPY, that backdrop translates almost directly into support on dips and explains why pullbacks after the minutes have been shallow so far.

**Rare official rate check puts a ceiling risk over USD/JPY

The minutes also confirmed something that matters specifically for USD/JPY: the New York desk of the Fed checked prices in the pair on behalf of the United States Department of the Treasury when spot was around 157 late in January. That type of rate check is extremely rare and is normally used to send a signal rather than to collect information. It is a clear indication that Washington does not want to see a sustained break above the 160.00 region. Tokyo has already shown multiple times that moves above 160.00 are unacceptable, so that confirmation effectively formalises a shared line in the sand. Combined with the current macro setup, it creates a natural “sell zone” for medium-term capital in the 156.00–158.00 region, even if short-term momentum remains dollar-friendly.

Futures positioning: short dollar crowd squeezed, but upside is not unlimited

CFTC data on dollar index futures shows that speculative accounts recently held net short exposure of around 20.5 billion USD, the most bearish stance since mid-2023. Large speculators were on the verge of flipping to net long, while asset managers had already nudged exposure higher. That structure matters for USD/JPY because the latest rally looks heavily driven by a short squeeze in the broad dollar rather than a fresh fundamental shock. When the market is this skewed to one side, the first hawkish surprise from the Fed tends to produce an outsized move as stale shorts cover. That is exactly what a near 1% daily rise in USD/JPY at these levels looks like. It also means that once the squeeze runs its course into resistance, the marginal buyer becomes harder to find, especially with official resistance above 157–160 and a clear expectation of Fed cuts later this year still embedded in money-market pricing.

Japan data: exports, CPI and the slow but real shift at the BoJ

On the Japanese side, the macro story is slowly turning in favour of the yen, even if price action does not yet fully reflect it. January trade figures showed exports jumping 16.8% year-on-year, the strongest increase since late 2022, with shipments to Asia and Europe reportedly up more than 25%. That mix – stronger external demand and a historically weak yen – provides a powerful backdrop for Japanese earnings and gives the Bank of Japan more room to normalise policy. Headline nationwide CPI previously printed around 2.1% YoY, and a survey of 76 economists conducted in mid-February shows a strong majority expecting the policy rate to reach roughly 1% by the end of June. About 36% of those respondents look for a move in June, 20% in April, and another large block in July. Even if the BoJ stays put in March, the message is clear: the direction of travel is up, not down. A central bank moving gradually toward positive and then higher rates is fundamentally inconsistent with USD/JPY maintaining 155–160 for years, especially once the Fed is simultaneously edging rates lower.

US–Japan capital flows and energy tie-ups: supportive now, but not a one-way street

Beyond macro data, capital flows also favour a strong dollar in the short run. Japan plans to deploy up to 36 billion USD into US oil, gas and mineral projects as part of a wider 550 billion USD bilateral commitment. Those allocations support demand for dollar assets in the near term and are one reason why yen strength has been slow to materialise despite the export surprise. At the same time, the broader environment includes aggressive US military deployments toward the Middle East and ongoing geopolitical risk around Iran, which tend to keep the dollar bid as a global benchmark asset and have also driven strong demand for the Swiss franc. For USD/JPY, that mix of yield advantage, structural capital flows into the US and geopolitical risk explains why dips below 150.00 have been aggressively bought since last year. But these flows are not permanent; they are sensitive to the rate differential, to how far the dollar trades from perceived fair value, and to political tolerance for further yen depreciation in Tokyo and Washington.

Technical picture for USD/JPY: 155 as the pivot, 157.66 and 159.45 as the cap

Technically, USD/JPY is testing a cluster of resistance levels. The pair has reclaimed the December high and is pressing the 155.00 psychological barrier that aligns with a monthly pivot level in the 155.4 area. On the daily chart, price recently oscillated around the mid-point of the Bollinger band set before the Fed minutes, then spiked higher as volatility returned. A clean daily close above 155.00 would shift the focus toward the 50-day moving average around 155.99 and the prior swing high at 157.66. Only a break and close above that 157.66 region would open the path toward 158.00 and potentially back to the January peak at 159.45. Momentum tools are constructive but not euphoric. The RSI on the daily timeframe is hovering just below the 50 line and trying to push higher; a sustained move above 50 would confirm that the bulls have regained control beyond just a short squeeze. Until that happens, the current rise can still be framed as a retracement of the January drop rather than a fresh impulsive leg. On the downside, a failure at 155.00 followed by a slip back under 153.00 would signal that the breakout has stalled and that the door is open for a move back toward the 150.00 region that has defined the lower boundary of the recent range.

Dollar context: DXY, EUR and CHF framing the USD/JPY risk profile

The wider currency backdrop does not justify extrapolating unlimited dollar strength from here. The Dollar Index is pushing into 97.7–98.0, an area that coincides with previous swing highs and the 20- and 50-day moving averages. That zone has acted as a ceiling before and fits with the idea of “upside, but not unlimited upside”. On the other side, the euro is supported by strong portfolio inflows into European equities; in dollar terms, a main Eurozone equity benchmark has outpaced the S&P 500 year-to-date, and balance-of-payments data still show healthy inflows to the bloc. That is why a sustained break of EUR/USD below 1.18 is hard to justify fundamentally and why a move back toward 1.19 by the end of March remains a realistic base case. At the same time, the Swiss franc remains extremely firm, with EUR/CHF grinding lower despite the Swiss National Bank’s reluctance to re-enter negative rate territory; markets now price roughly a 25-basis-point cut over the next year, starting from an effective rate already around –12bp implied. That tells you two things relevant for USD/JPY. First, the dollar strength we see now is tactical rather than structural. Second, in a true risk-off or US-Iran escalation scenario, haven demand will not be concentrated solely in the dollar; other low-yielding safe currencies can also absorb flows, capping further upside in the dollar complex.

Near-term playbook for USD/JPY: data-driven volatility around 155.00

Short-term, the path for USD/JPY will be dictated by incoming US and Japanese macro releases. On the US side, the focus now turns to core PCE inflation, the advance estimate of Q4 GDP and the preliminary February PMI data. A run of hotter-than-expected prints would validate the hawkish tone in the minutes, push the Dollar Index firmly through 98.00 and likely propel USD/JPY through 155.00 toward the 156.00–157.00 pocket. Conversely, softer PCE or a downside surprise in GDP would take some heat out of the dollar move and could drag the pair back toward the low-150s even before any change in Fed rhetoric. On the Japanese side, the national CPI release will be scrutinised for any sign that inflation is re-accelerating above the prior 2.1% YoY reading. A firm print would harden expectations for a rate hike by June, narrow the rate differential and make it harder for USD/JPY to hold above the mid-150s. A softer-than-expected number would buy the BoJ some time but would not fully erase the expectation of at least one hike by mid-year, given the survey distribution. While this data runs, price is likely to oscillate around 155.00, with very short-term participants buying dips toward 153–154 and fading spikes into 156–157 based on intraday signals.

Medium-term stance on USD/JPY – verdict: Sell, with a bearish bias above 155

Putting the whole picture together – Fed minutes, US data, futures positioning, Japanese macro and the clear official discomfort with USD/JPY above 157–160 – the medium-term risk-reward favours a bearish stance on the pair from current levels. The near-term impulse is undoubtedly bullish: yields are higher, the dollar is stronger, and the pair has momentum behind it into 155.00. But this is priced on top of a dollar that has just squeezed a 20.5-billion-USD net short futures position, a Fed that still has roughly two cuts in the curve for later this year and a BoJ that is expected by most analysts to lift its policy rate toward 1% by mid-year. Layer on top an explicit rate check around 157.00 and a shared US-Japan desire not to see a sustained break above 160.00, and the upside from 155–157 begins to look limited compared to the downside once the macro narrative rotates back toward easing in the US and tightening in Japan. My stance at current prices around 155.00 is Sell on USD/JPY, with a medium-term bearish bias. Rallies into the 156.00–158.00 band look like opportunities to reduce or reverse long exposure, with a reasonable downside target back toward 150.00 over the next legs of the cycle. A sustained daily close above 160.00 would be the level that invalidates this view and forces a reassessment, but the current combination of policy, positioning and official signalling argues that such a break should be treated as low probability rather than a base case.

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