USD/JPY Price Forecast – Dollar–yen rebounds from 152 toward 158 as election risk lifts pair

USD/JPY Price Forecast – USD/JPY

USD/JPY – rebound from the 152 base puts 157–158 back in play

USD/JPY has reversed a violent drop of more than 4% from the 159.13 area down toward 152.06 and then bounced roughly 3.5% off the 151.91–152.06 support pocket back above 157.00. The pair has risen in five of the last six sessions, and price is again pushing into a resistance band that capped rallies through late-2025. The rebound began just ahead of long-term support defined by the 2022 and 2023 swing highs together with the 38.2% retracement of the April advance around 151.91/151.98. As long as USD/JPY holds above that base, the market is treating the January slide as a correction within an ongoing uptrend, not as a completed top. A weekly close under 151.91/151.98 would be needed to argue that a larger downside phase has started.

USD/JPY – election, fiscal expansion and why the yen stays offered

The macro story behind this move is driven by politics and fiscal policy in Japan. The country heads into a snap election on 8 February with Prime Minister Sanae Takaichi campaigning on an expansionary agenda. Polls point to a strong victory for the Liberal Democratic Party, which would give Takaichi greater room to deliver looser fiscal policy. One of the headline promises is suspending the 8% consumption tax on food for two years, at a time when Japan already carries a heavy public debt load. Markets read that as a signal of more debt-funded spending ahead. That has weighed on the yen and helped push USD/JPY back through 157.00 to a two-week high. Takaichi has also highlighted the benefits of a weaker currency in campaign remarks; even after softening the rhetoric, the impression is clear that yen strength is not a political priority. That combination of fiscal expansion and tolerance for depreciation is a straightforward negative for JPY in the near term.

USD/JPY – BoJ versus Fed: policy gap still tilts in favour of the dollar

On the monetary front, Tokyo headline CPI has cooled to its weakest level since early 2022, signalling softer demand-driven inflation and reducing pressure on the Bank of Japan to accelerate tightening. At the same time, the BoJ’s Summary of Opinions shows that board members remain concerned about price pressures supported by a weak yen and stronger wages, and a private survey points to Japan’s services sector growing at its fastest pace in almost a year. That mix keeps a BoJ hike in the first half of 2026 on the table but only within a very gradual path. In the United States, markets still price around two rate cuts from the Federal Reserve this year, which should in theory limit upside in USD/JPY, but dollar dynamics remain firm. Comments from Fed Governor Lisa Cook that risks remain skewed toward higher inflation have helped lift the dollar index to new highs since late January. The yield differential therefore continues to favour the dollar, even after the latest setback in USD/JPY, and that supports buying dips rather than chasing sustained yen strength unless guidance from either central bank shifts sharply.

USD/JPY – weekly map: 151.91 as the floor, 160.74–161.95 as the ceiling

The weekly structure on USD/JPY is now well defined. The January selloff stopped just pips ahead of the 151.91/151.98 cluster, where the 2022 and 2023 swing highs align with the 38.2% retracement of the latest April advance. That area is the line in the sand for the medium-term bullish view. Above it, the rebound is driving price toward the 157.70–158.08 resistance band, which is built from the 2025 high-week close, the December high close and the January high-week close. Just above sits 158.88, the level that bulls failed to secure on a closing basis several times during 2025 despite repeated attempts. A clear weekly close through 158.88 would confirm resumption of the 2025 uptrend and reopen the path toward the 2024 high-week close and 2024 swing high at 160.74–161.95. That 160.74–161.95 corridor marks the upper edge of the broader range and the zone where intervention speculation and official jawboning previously intensified.

USD/JPY – short-term structure: 156.50 break, 157.64 test and 155.60 support

On the intraday and daily charts, the last leg of the move has been defined by a clean break and retest around 156.50. That level combined the 100-period simple moving average on the four-hour chart with the 61.8% Fibonacci retracement of the 159.13–152.06 downswing. Moving decisively above 156.50 confirms that the rebound carries more weight than a one-day squeeze. From that same Fibonacci set, 157.64 marks the 78.6% retracement and lines up with the lower edge of the 157.70–158.08 weekly resistance band. A rejection around 157.64–158.08 would set the stage for a corrective pullback, with the first meaningful downside level near 155.60, the 50% retracement of the 159.13–152.06 leg. Below 155.60, attention shifts quickly to 154.79 and 154.10, where the 61.8% retracement of the most recent advance sits. A daily close under 154.10 would weaken the bullish narrative and start to drag focus back toward the 151.91/151.98 base.

USD/JPY – momentum profile: stretched but still constructive

Momentum indicators support the bullish tilt but warn about chasing into resistance. On the four-hour chart, the relative strength index sits just below the overbought threshold around 70, while MACD is positive with a shrinking histogram. This usually indicates that buyers still control the tape but that upside energy is slowing as price hits a key barrier. If USD/JPY breaks cleanly through 157.64 and holds above 158.00 with RSI pushing sustainably above 70 and the MACD histogram re-expanding, that would confirm a fresh momentum impulse targeting 158.88 and then 159.45, the January high identified by other technical work. If instead RSI rolls over from just below 70 and MACD flattens or crosses down as price stalls under 157.70–158.08, the probability of consolidation or a deeper pullback toward 155.60 and potentially 154.10 rises. On the daily view, the 55-day moving average and the early-January low form a support pocket around 156.29–156.12, and the short-term bullish bias stays valid as long as USD/JPY holds above roughly 155.56, the late-December low.

USD/JPY – broad yen performance confirms a structural JPY selloff

The last week’s performance tables show the Japanese yen down about 2.36% versus the dollar, around 1.17% versus the euro and about 1.07% versus the pound, while losing around 1.45% to the Canadian dollar, 1.74% to the Australian dollar and 1.46% to the New Zealand dollar. The yen has been the weakest leg in most G10 crosses. That matters because the current rally in USD/JPY is not an isolated event; it is part of a broad, policy-driven yen selloff tied to fiscal concerns, election risk and slow BoJ normalisation. In that context, the move above 157.00 is better read as an expression of genuine portfolio reallocation away from JPY rather than a narrow positioning squeeze that can be faded aggressively on the first sign of stress.

USD/JPY – intervention risk, 160 handle and institutional bias

Institutional commentary on the pair largely aligns with the technical picture. One major house notes that USD/JPY has already rallied hard from late-January lows near 152 back above 157 and that the snap election outcome is mostly discounted. A stronger mandate for the ruling coalition would reinforce expectations for continued fiscal expansion, which is yen-negative unless the BoJ responds with faster rate hikes. At the same time, officials remain sensitive to rapid moves near the 159–160 area, where talk of intervention escalated previously. The practical takeaway is that the area between 160.00 and roughly 161.95 is where the probability of direct or indirect official resistance increases sharply, even if that resistance initially comes in the form of verbal warnings rather than hard action. A weaker-than-expected election result for the ruling bloc could deliver a short-lived JPY rally, but the broader bias in these assessments still points toward higher USD/JPY over the medium term with increased volatility around any return to the 160 region.

USD/JPY – risk backdrop: tech wobble and why the yen is not acting as a haven

The global backdrop is risk-off across several asset classes. US equities are under pressure, with the S&P 500 lower and the Nasdaq 100 down more than 1% as AI-heavy names correct. Advanced Micro Devices has dropped around 17% on weak guidance, Nvidia is lower by more than 3%, and the Philadelphia Semiconductor Index has fallen about 4.4%. Software names such as Palantir, Snowflake and Datadog are also sliding. Silver is down in the double digits, oil is retreating and Bitcoin has broken to its lowest level since late 2024. In a classic environment, that kind of cross-asset stress would send capital into the yen. Instead, USD/JPY is climbing. That divergence shows how dominant the Japan-specific story has become; fiscal risk, election uncertainty and BoJ policy lag are outweighing any safe-haven appeal. For price action, that means that risk-off alone is no longer enough to guarantee yen strength while those domestic headwinds remain unresolved.

USD/JPY – tactical roadmap and stance: bullish bias, buy dips while 151.91 holds

Taken together, the structure on USD/JPY remains skewed to the upside rather than neutral or bearish. The pair has reclaimed the 156.50 confluence, is pressing against the 157.64–158.08 resistance band and carries layered support at 155.60, 154.79 and 154.10, with the primary base anchored at 151.91/151.98. Election dynamics, expansionary fiscal plans and a slow-moving BoJ continue to work against the yen, even as the Fed is expected to cut rates later in the year. Genuine intervention risk ramps up once price trades closer to the 159–160.74–161.95 region, but that zone currently functions as an upside objective, not as a ceiling the market has already failed at. The configuration does not justify a structural sell stance while USD/JPY trades above 154 and especially above 151.91. The profile fits a bullish, buy-the-dip approach: favour continuation toward 158.88, then 159.45 and potentially the 160.74–161.95 band as long as daily closes remain above 154–155 and weekly closes stay lodged above the 151.91/151.98 floor. Only a clear weekly break under that long-term base would flip the bias to a decisive bearish, sell-on-rallies framework.

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