USD/JPY Forecast: 152.40 Support in Focus as BoJ-Fed Policy Divergence Deepens
The USD/JPY pair is facing steady selling pressure this Tuesday and is having trouble staying above 153.00. Even though global equity...
Quick overview
- The USD/JPY pair is experiencing selling pressure and struggling to maintain levels above 153.00 despite a positive global equity market mood.
- The divergence in monetary policy expectations between the Bank of Japan and the US Federal Reserve is contributing to the Yen's strength against the Dollar.
- Japan's GDP growth of only 0.1% in the last quarter of 2025 indicates weak domestic demand, impacting the Bank of Japan's rate hike prospects.
- The US Dollar is facing challenges due to fading expectations for higher interest rates, with a potential rate cut anticipated by June 2026.
The USD/JPY pair is facing steady selling pressure this Tuesday and is having trouble staying above 153.00. Even though global equity markets are showing a positive risk-on mood, the Japanese Yen is still performing better than the US Dollar.
The main reason for this downward trend is the growing difference in monetary policy expectations between the Bank of Japan and the US Federal Reserve, made worse by new economic data from both countries.
Japan’s Fragile Recovery Underpins Safe-Haven Yen
Japan just avoided a technical recession, but the latest fourth-quarter GDP report has made things more complicated for Yen traders.
- Japan’s economy grew only 0.1% quarter-on-quarter, or 0.2% annualized, in the last three months of 2025. This was much lower than the expected 1.6%, showing that domestic demand is still weak under Prime Minister Sanae Takaichi’s new administration.
- Analysts say this slow growth means the Bank of Japan is less likely to raise rates soon. Still, the GDP deflator rose 3.4%, which shows inflation is still an issue. This keeps talk of policy normalization going and gives the Yen some support that the US Dollar does not have right now.
US Dollar Wilts Under Dovish Fed Expectations
Meanwhile, the US Dollar is having trouble attracting buyers as expectations for higher interest rates over a longer period are fading.
1. The Disinflation Catalyst
After last week’s lower-than-expected January CPI of 2.4%, the market now expects the Federal Reserve to take a more cautious, dovish approach.
- According to the FedWatch Tool, investors now see almost a 90% chance that rates will stay the same in March, and are now looking ahead to a possible first rate cut in June 2026.
- The US Dollar Index is steady near 96.97, but it could weaken further before Wednesday’s FOMC Minutes. If the minutes show more support for easing, USD/JPY might drop again.
2. Holiday Liquidity Vacuum
The pair has also struggled to gain momentum because of low trading volumes. US markets were closed for Presidents’ Day on Monday, and the Lunar New Year kept many Asian traders away, so recent price moves have been driven more by technical factors than new economic news.
USD/JPY Technical Analysis: The 152.40 “Line in the Sand”
Looking at the 2-hour chart, USD/JPY is stuck in a narrowing range, and sellers are clearly leading the short-term trend.
| Level Type | Price Point | Technical Outlook |
| Major Resistance | $154.80 | Alignment with the 200-period EMA; the ultimate bearish ceiling. |
| Immediate Resistance | $153.76 | The 50-period EMA; a break above this is needed to stem the bleed. |
| Critical Support | $152.40 | The primary floor; a breach here triggers a move toward 151.28. |
| Yearly Pivot | $150.29 | The psychological target for a sustained bearish trend. |
The Verdict: Weekly Bias
For the week of February 17, 2026, the outlook is bearish if the price stays below 153.80.
USD/JPY is likely to keep moving lower as long as it stays below the 154.00 resistance level. Traders should be ready for more volatility on Wednesday after the FOMC minutes and on Thursday with the Durable Goods report.
Trade idea: If USD/JPY breaks below 152.40, consider short positions with a target of 151.30. Set a stop-loss above the 50-EMA at 153.80 to protect against a sudden reversal.
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