USD/JPY Price Forecast: 156.44 Holds as BoJ Pressure Tests Yen Bulls
During the European session on Tuesday, USD/JPY struggled to sustain its rebound and slipped back below the 156.00 handle...
Quick overview
- USD/JPY struggled to maintain its rebound, slipping below 156.00 before stabilizing near 156.44 due to the strength of the Japanese Yen.
- The Bank of Japan's hawkish stance and recent rate hikes have bolstered Yen demand, keeping downward pressure on USD/JPY rallies.
- The US dollar faces softness as traders anticipate potential Federal Reserve rate cuts, with upcoming macro data likely to influence its direction.
- Technically, USD/JPY shows a constructive structure, with key support levels indicating active dip-buying and potential for upward movement.
During the European session on Tuesday, USD/JPY struggled to sustain its rebound and slipped back below the 156.00 handle before stabilising near 156.44. The hesitation reflects persistent strength in the Japanese Yen, underpinned by the Bank of Japan’s hawkish stance, firm safe-haven demand, and renewed softness in the US dollar. Together, these forces have kept traders cautious about chasing upside momentum at current levels.
BoJ Hawkish Shift Anchors Yen Demand
The Yen continues to draw support after the Bank of Japan signalled it is not done tightening policy. Last week’s rate hike pushed borrowing costs to their highest level in more than three decades, while the benchmark 10-year Japanese government bond yield climbed to a 26-year high.
Governor Kazuo Ueda reinforced this message, saying further rate increases remain likely if growth and inflation evolve as expected. That guidance has strengthened confidence in Japan’s policy outlook and kept downward pressure on USD/JPY rallies.
Intervention rhetoric has added another layer of support. Japanese officials reiterated their readiness to act against disorderly currency moves, a signal markets continue to take seriously after past episodes of direct intervention.
Dollar Softness and Data Risks Weigh
On the US side, the dollar remains under pressure as traders price in a higher probability of multiple Federal Reserve rate cuts in 2026. Questions around the Fed’s future communication framework have also unsettled sentiment, limiting demand for the greenback.
Attention is now turning to US macro data, including preliminary GDP and durable goods orders, which could influence near-term direction. Softer readings would likely reinforce expectations of easier policy and keep the dollar on the defensive.
USD/JPY Technical Outlook and Trade Setup
From a technical perspective, USD/JPY is holding a constructive structure on the 4-hour chart. Price rebounded from the 154.50–155.00 demand zone and continues to respect a rising trendline drawn from early December.
The 50-EMA at 156.13 and the 100-EMA near 155.88 form a key support cluster, signalling that dip-buying remains active rather than driven by short covering.
Momentum is neutral, with RSI near 51, suggesting consolidation rather than exhaustion. Resistance is layered at 156.94, followed by 157.75. A sustained break above 156.94 would open the door toward 157.75–158.60, while a drop below 155.80 would weaken the bullish structure and expose a pullback toward 154.50.
Trade idea: Buy pullbacks near 156.00, target 157.70, stop below 155.40.
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