USD/JPY Forecast: Bullish Momentum Eyes 153.54 as “Takaichi-nomics” and Hot NFP Reshape Policy Expectations
USD/JPY has moved back into positive territory during the European session and is trading around 153.39. Although it is still below...
Quick overview
- USD/JPY is trading around 153.39, influenced by a strong US job market and political changes in Japan.
- The US added 130,000 jobs in January, significantly surpassing expectations, leading to a drop in the unemployment rate to 4.3%.
- Japan's Prime Minister Takaichi's recent election win is expected to result in increased government spending and potential rate hikes from the Bank of Japan.
- Traders should monitor today's US inflation data, as high inflation could bolster the USD in the short term.
USD/JPY has moved back into positive territory during the European session and is trading around 153.39. Although it is still below recent highs, a strong US job market and major political changes in Japan are making the pair more volatile.
US Labor Resilience: Why the Dollar is Defying Rate Cut Bets
The main reason for the US dollar’s recovery is the January Nonfarm Payrolls (NFP) report. Its release was pushed to Wednesday, February 11, because of the late-2025 government shutdown.
- The “Surprise” Print: The US added 130,000 jobs in January, far exceeding the expected 70,000.
- Sector Breakdown: Most of the job growth came from an 81,900 increase in healthcare, with steady gains also seen in professional services and construction.
- Unemployment Dips: The unemployment rate dropped to 4.3% from 4.4% in December, leading investors to expect a more aggressive stance from the Federal Reserve.
Investors are now less likely to expect a rate cut in March. Since the Fed will probably keep rates steady until summer, the difference in yields between the USD and JPY continues to support the pair.
“Takaichi-nomics” 2.0: Japan’s Historic Mandate
Meanwhile, the Japanese Yen is being revalued after Prime Minister Sanae Takaichi’s landslide win on February 8, 2026.
- Supermajority Win: Takaichi’s LDP won 316 seats, giving her a strong mandate to push for more government spending.
- Fiscal Stimulus: Markets expect a large stimulus package focused on growth and possibly a two-year pause on the food consumption tax.
- BoE/BoJ Divergence: Takaichi’s ‘Work, Work, Work’ approach is expected to boost nominal growth to 3-4%. As a result, some institutions, such as Mizuho, predict up to three Bank of Japan rate hikes in 2026, possibly starting in March.
USD/JPY Technical Analysis: Buyers Defend 152.26 Demand Zone
The USD/JPY 4-hour chart shows the pair in a period of change. After dropping from the 157.65 high, it has found strong support at 152.26, matching a rising trendline seen over several months.
Resistance Hurdles: The recovery is currently limited by the 0.236 Fibonacci retracement at 153.54. If the price moves above this level and holds, it could rise toward 154.95 (0.5 Fib).
Bearish Signals: The 50-period Moving Average has dropped below the 200-MA near 155.70. This suggests that, even though there is a short-term rebound, the medium-term trend is still downward.
Momentum: The RSI is close to 40, which shows the market is consolidating instead of making a strong move in either direction.
Trade idea: Go long above 153.60, aiming for 154.90 as a rebound target. Set a stop-loss below 152.40 to guard against a break of the support trendline.
Summary: Key Levels to Watch
| Event | Date/Time | Impact |
| US CPI (Jan) | Today, 13:30 GMT | High – A print above 2.5% could drive USD/JPY back to 155.00 |
| BoJ March Meeting | March 18-19 | High – First potential rate hike of the Takaichi era |
| Support Level | 152.26 | Critical floor; failure here exposes 151.50 |
Looking ahead, traders should watch today’s US inflation data. If inflation stays high, the USD will likely remain strong in the short term, while Takaichi’s policies continue to support the Yen over the long run.
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