USD/JPY Price Forecast - USDJPY=X Drops Below Key Averages as Yen Rally Targets 152–150 Zone

USD/JPY – Sharp reversal as Takaichi win and falling US yields flip the script

USD/JPY has shifted from a persistent grind higher to an aggressive correction, with the pair now trading around 152.8–153.2 after three straight daily declines and more than 2.5% loss so far this week. The move is being driven by a clean combination: a decisive victory for Prime Minister Sanae Takaichi that removed Japanese political uncertainty just as US yields and the dollar started to roll over. What had been a one-way, carry-driven move toward 159 has suddenly become a crowded exit, with short-yen positions being unwound and volatility picking up as the pair slices back through key trend levels.

USD/JPY – Bearish technical structure below the 50-, 100- and 200-day SMAs

On the daily chart USD/JPY has broken decisively below the short-term trend infrastructure that supported the run-up. Price is now lodged under the 100-day simple moving average, which sits around 154.4–154.6, after losing the 155.00 handle and erasing the latest push higher. Above the market, the 50-day SMA near 156.27 has turned into a medium-term ceiling rather than a springboard. On the downside, the 200-day SMA around 150.50 is the next structural target if selling pressure accelerates. Measured from the 152.23 swing low to the 159.05 high, the 61.8% retracement comes in around 154.84 and the 78.6% retracement around 153.69; both have now been broken or are acting as pivot zones rather than solid floors, which confirms that the prior uptrend has given way to a corrective phase rather than a shallow dip inside an intact bull run.

USD/JPY – Momentum and volatility metrics confirm downside control

Momentum and volatility indicators are aligned with the price damage. On the daily time frame, the Relative Strength Index for USD/JPY hovers near 35, firmly in bearish territory but not yet oversold, which leaves room for further downside without requiring an immediate mean-reversion bounce. The 14-day Average True Range has widened toward 1.3–1.4 yen, signaling broader daily swings as positions are cut and liquidity thins on the way down. This combination – RSI grinding lower toward 30 with ATR expanding – typically marks a live correction rather than a completed flush, particularly when it comes after a multi-month climb that pushed the pair close to 159.

USD/JPY – Critical support band at 152.80–152.00 before the 150.00 handle

Price action over the last sessions has carved out a crucial support band for USD/JPY between roughly 152.8 and 152.0. Intraday lows around 152.80 and the end-January trough in the 152.10–152.21 area cluster together with a prior volume point of control near 153.9, creating a dense zone where short-term players are testing whether the correction pauses or accelerates. A clean daily close below 152.00 would expose the 200-day SMA around 150.50 and, below that, the psychologically important 150.00 round number. If that 150 zone breaks, the technical map opens toward the 1.618 Fibonacci extension of the prior upswing around 148.00, which would mark a far deeper repricing of the entire 2025–early-2026 advance. Until 153.7–154.8 is reclaimed on a closing basis, rallies into this band are technically just recovery bounces inside a developing downtrend.

USD/JPY – Election landslide for Takaichi shifts political risk in Japan’s favor

The yen’s strength is not coming from the Bank of Japan suddenly turning hawkish; it is coming from political clarity that removes a key discount that had been hanging over the currency. Prime Minister Sanae Takaichi’s snap election delivered a super-majority and a powerful mandate, reducing fears of messy coalition bargaining or fiscal free-for-all scenarios. Markets read her platform as “responsible fiscal policy” – committing not to lean aggressively on debt-funded giveaways – which narrows the gap between Japan’s fiscal stance and that of other major economies. This matters for USD/JPY because it undercuts part of the justification for persistent yen weakness: if fiscal risk and political noise recede in Tokyo, the premium required to hold yen assets shrinks, and capital can return at the margin. The result over the last days has been a broad yen rebound across the board – not only against the dollar, but also against sterling, the euro, the Canadian dollar and the Australian dollar – reinforcing that this is a genuine re-rating of the currency rather than a pair-specific fluke.

USD/JPY – US jobs surprise at 130k and DXY near 96.75 fail to restore dollar dominance

On the US side, the labor report delivered a positive headline, with nonfarm payrolls rising around 130k versus roughly 70k expected, enough to trigger an initial spike in the dollar index toward 97.27 before it slipped back toward 96.75. That beat pushed back the market’s first full rate-cut pricing to around July, but it did not change the broader narrative: the Federal Reserve is still seen on a gentle easing path over 2026, and structural questions around US growth, earnings quality and fiscal trajectory remain unresolved. For USD/JPY that means the US side of the equation is no longer strong enough to fully offset any improvement in yen sentiment. The post-NFP bounce in the dollar was quickly sold into, and the pair continued to leak lower despite the data surprise, underlining that flows are being driven more by position reduction and shifting rate-differential expectations than by a single macro print.

USD/JPY – Rate expectations, Trump pressure and Fed credibility in the background

The policy backdrop is adding another layer of asymmetry. Rate markets now see the first Fed cut coming later than a week ago, but the repricing is modest and fragile because political pressure is building in the opposite direction. Public criticism of high interest rates from President Trump increases the risk that any economic wobble or softer jobs run will trigger aggressive calls for quicker easing. That leaves the Fed trying to defend its credibility while watching a labor market that is no longer firing on all cylinders. For USD/JPY this produces a skew: if US data soften, yields can fall quickly and the dollar can slip, while further upside surprises after a 130k print will not deliver the same magnitude of upside as earlier in the cycle. That asymmetric payoff favors selling strength rather than buying dips at current levels.