USD/JPY Price Forecast: Pair Hovers Near 153 After 3% Drop From 157.7 High

USD/JPY price action – from 157.72 spike to a 152 handle reset

USD/JPY has just put in a classic momentum break: after topping near ¥157.72 last week, the pair collapsed roughly 3% to close around ¥152.63, with a flush to about ¥152.27–¥152.76 before a modest bounce toward ¥153.0–¥153.5. That intraday reaction – dropping toward the low-152s after Japan’s weaker-than-expected Q4 GDP, then snapping back above ¥153.0 – tells you the market is no longer one-way long dollars. Dip-buyers are still there, but they are fighting against a structural shift toward yen strength rather than surfing a clean uptrend from April 2025.

Japanese side – weak GDP, firm yields, and a BoJ that is still normalizing

Japan’s Q4 GDP grew only 0.1% quarter-on-quarter after a -0.7% contraction in Q3, well under the 0.4% consensus. Private consumption rose 0.1% after 0.2% in Q3, while external demand was flat after a -0.2% drag in the prior quarter. On the surface that is a soft print, and it temporarily knocked the yen lower as the market trimmed the probability of an April rate hike from the Bank of Japan. Under the surface, though, the story is more nuanced. Consumption is still positive, external demand has stopped contracting, and the overall growth profile is consistent with a gradual exit from ultra-easy policy, not a return to zero-inflation stagnation. That is why the market still prices an H1 2026 hike cycle rather than abandoning normalization.
At the same time, 10-year Japanese government bond yields sit above roughly 2.21% and not far from the recent 2.3% area. The fact that yields have stabilized at elevated levels compared with most of 2025 signals that the previous upward move in Japan’s curve remains intact. Fixed-income investors still see value in yen assets, and that stabilizes demand for JPY even on days when the data disappoints. Put simply: the GDP miss changes the timing debate around the next BoJ move, but it does not kill the normalization story that underpins a medium-term bearish bias for USD/JPY.

US side – yields drifting lower, dollar off the highs, Fed cuts creeping closer

On the US side, the interest-rate cushion under USD/JPY is eroding. The 10-year Treasury yield has slipped back toward the 4.00% region after trading near 4.3%, and two-year yields around the mid-3% area show that the market is increasingly comfortable with 2026 rate cuts from the Federal Reserve. The dollar index has bounced toward the 97 handle but remains well below the recent peak around 99, highlighting that the broad dollar uptrend is losing energy even as some short-term support returns.
The options market is telling the same story. CME FedWatch now implies roughly a 68–69% probability of a June cut, up from about 65% earlier in the week. That steady drift higher in cut odds, combined with falling yields, is the opposite of what you want if you are long USD/JPY. Rate-differential trades that dominated 2025 are being repriced as investors recognize that the Fed is closer to easing while the BoJ is only at the start of its hiking path.

Policy divergence and neutral rate – why medium-term flows still favor the yen

The big picture remains that the US is late cycle and gradually heading toward lower policy rates, while Japan is early cycle and inching toward a higher “neutral” rate. If the BoJ ultimately signals a neutral band closer to 1.5%–2.5% rather than 1%–1.25%, the market will price multiple hikes over the next two to three years. In that scenario, every dip in Japanese yields is an opportunity for real-money accounts to accumulate JPY assets at better levels.
At the same time, the Fed is unlikely to deliver a new tightening cycle unless US inflation re-accelerates aggressively. Current pricing for several cuts over the next 12 months narrows the US–Japan yield spread that carried USD/JPY up toward 160 in previous phases of the trade. That narrowing is exactly what you would expect to push the pair away from those highs and back toward the 150 and even 145–140 zones over a 6–12 month horizon if BoJ normalization and Fed easing both unfold.

Short-term drivers – GDP shock, BoJ rhetoric and CPI-driven volatility

Short term, USD/JPY is trading as a headline-driven volatility product. The Q4 GDP miss triggered a knee-jerk move lower in the yen and a spike from the low-152s back above ¥153.0 as shorts covered, but the fundamental message from Japan is still one of gradual improvement in domestic demand and diminishing deflation risk.
On the policy-communication front, comments from an adviser to Prime Minister Sanae Takaichi that there is “no urgent need” to install aggressive reflationists on the BoJ board gave the pair room to pop toward ¥153.30 earlier, as markets interpreted that as a sign against an immediate hawkish shift. That move was later tempered by more hawkish remarks from BoJ board member Tamura, which reinforced the idea that normalization is proceeding and created sharp two-way swings in USD/JPY.
In the US, traders are sitting on edge ahead of CPI and later the FOMC minutes. Stronger-than-expected inflation would likely propel USD/JPY above the ¥154.0 area in the very short term, while a soft CPI print could knock the pair back below ¥153.0 and invite another test of the mid-152s. Right now the market is effectively running a 153.00–154.00 intraday range regime, with volatility easily kicking the pair 50–70 pips in either direction on any surprise.

Technical structure – uptrend under attack with momentum turning against USD/JPY

From a structural standpoint, the multi-month uptrend that started in April 2025 is being challenged but not yet broken. Price has spent months respecting a rising trendline, but the recent 3% slide and repeated probes toward the low-152s bring that support band into play. The daily RSI has slipped below the neutral 50 mark, confirming that, over the last 14 sessions, average selling pressure has outpaced buying. The MACD histogram sits below zero, with short-term moving averages signaling that bears have taken control of momentum.
On the moving-average map, USD/JPY is trading below its 50-day EMA while still holding above its 200-day EMA. That configuration – near-term bearish, longer-term constructive – matches the macro backdrop: the pair can easily fall further in the coming weeks without yet destroying the entire bull trend off the 2025 lows. A decisive daily close below the 200-day EMA would change that story and open the way toward the ¥150 handle and then ¥145.

Levels that matter – 152.27, 153.76, 154.40, 156.08, 150.60 and the 160 intervention ceiling

The recent price path gives a clean set of tactical levels. On the downside, the immediate focus is ¥152.27–¥152.76, the cluster of lows where the latest flush stopped. A clear break and daily close below that zone would put the late-January trough around ¥152.10 in play. Losing ¥152.10 would be the market’s signal that the April 2025 trendline is no longer dictating the tape and that the correction is morphing into a more durable downswing. Below there, attention shifts to the ¥150.60 region aligned with the 200-period simple moving average; a move into that zone effectively concedes the medium-term bullish structure and opens the path toward the psychological ¥150 and then the mid-140s over time.
On the topside, the first real test for the rebound sits near Thursday’s high around ¥153.76, then the mid-December low turned resistance around ¥154.40. Clearing ¥154.40 on a closing basis would tell you that dip-buyers have reasserted themselves and are trying to drag USD/JPY back toward the 50-day average around ¥156.08. Only a break of that ¥156.0–¥156.1 band would put the prior spike high at ¥157.72 back on the radar and reopen the conversation about a retest of the ¥159.42 January peak. Beyond that, the 160 area remains a de-facto ceiling given the persistent threat of direct Japanese intervention if the yen weakens too quickly.

Sentiment and positioning – from one-way carry to two-way risk

Positioning is shifting from complacent long-dollar carry to a more balanced, two-way market. The sharp 2.9% weekly decline into ¥152.63 flushed a meaningful chunk of late-longs, while the bounce to the ¥153.0–¥153.5 band shows that not everyone is ready to abandon the trade as long as the pair stays above the 200-day EMA. However, the fact that rallies are being sold faster and dips toward the low-152s attract fresh interest from macro funds looking to add yen exposure indicates that the path of least resistance is no longer straight up.
Risk-off episodes are also no longer automatically JPY-positive, as the yen has lost some of its safe-haven status in the eyes of fast money. Instead, it is the rate-differential and BoJ trajectory that dominate flows. That makes USD/JPY highly sensitive to every incremental data point on Japanese inflation, wage growth and consumption, alongside US releases that shift Fed expectations.

Trading stance and scenario map – how to treat USD/JPY around 153–154

From a trading perspective, USD/JPY around ¥153–¥154 looks more like a sell-rally environment than a buy-the-dip opportunity. The combination of sub-50 RSI, negative MACD, price below the 50-day EMA, softer US yields, rising odds of a June Fed cut and stable or rising Japanese yields tilts the risk-reward in favor of renewed yen strength once the current short-covering bounce exhausts.
A strong US CPI or unexpectedly hawkish FOMC minutes could squeeze the pair toward ¥154.40 or even ¥156.0 near the 50-day average. That zone, in my view, is where medium-term sellers should be waiting, targeting a return to the ¥152.0–¥152.5 band and then the ¥150.5–¥150.6 support if BoJ normalization headlines or softer US data reassert the macro story. Conversely, if CPI underwhelms and Fed officials lean dovish, such a move may never materialize and the market could simply grind lower from current levels, with ¥152.27 the first domino and ¥150.60 the bigger objective on a multi-week horizon.

USD/JPY verdict – Sell rallies, bearish bias while below 156.0

Putting the macro and the chart together, the stance on USD/JPY is bearish with a clear preference to sell strength rather than chase upside. Japan’s GDP miss adjusted the timing of the next hike but did not derail BoJ normalization; Japanese 10-year yields near 2.21% and above 2025 levels keep yen assets attractive; US 10-year yields sliding back to 4.00%, DXY stuck below 99 and June cut odds near 68% steadily chip away at the dollar’s advantage; on the chart, the pair trades below its 50-day EMA, with momentum indicators pointing lower and price repeatedly testing the low-152s.
As long as USD/JPY trades below roughly ¥156.0, the pair looks like a Sell on rallies into the ¥153.5–¥156.0 band, with initial downside targets in the ¥152.0–¥152.5 support zone and a medium-term roadmap toward ¥150.5 and, if BoJ hikes collide with multiple Fed cuts, the mid-140s over a 6–12 month window.

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