USD/JPY Price Forecast: Pair Claws Back Above 155 As “Warsh Shock” And Japan Election Test 160.00 Line

USD/JPY Price Snapshot And Immediate Zone

USD/JPY is trading around 155.8–156.0 after snapping back hard from the 152.0 area hit during last week’s de-leveraging scare. The pair has reclaimed the 155.0 handle, pushed to an intraday high near 155.98, and is now pressing into a dense resistance band between roughly 155.5 and 156.5. That zone lines up with a 0.5–0.618 Fibonacci pocket from the latest downswing, with 155.67 as the 0.5 retracement and 156.51 as the 0.618 level, and it sits on top of key short-term moving averages and a four-hour 200-period reference. Daily structure still shows higher highs and higher lows from the 140.0 base and the 152.0 pullback, but the most recent leg is no longer a one-way melt-up; price is clearly being tested around 155.0–156.5 rather than trending unchecked.

US Policy, “Warsh Shock” And Dollar Side Of USD/JPY

Dollar weakness earlier came mainly from politics and signaling, not from a collapse in US data. The US president publicly said a weaker dollar was “great,” and that comment initially added fuel to broad selling. The turn came when the new Treasury Secretary Scott Bessent signaled discomfort with excessive dollar weakness ahead of the latest FOMC decision, and another senior figure, Kevin Hassett, walked back the optics of cheering a soft currency. On top of that, the nomination of Kevin Warsh to replace Jerome Powell at the Fed has been treated as a hawkish signal. Markets read the “Warsh shock” as a tilt toward tighter balance-sheet management and less tolerance for sticky inflation. Fed policy is still in a 3.50%–3.75% band, and futures price roughly 48 basis points of cuts by year-end, but those expectations are now vulnerable. ISM Manufacturing just printed around 52.6, the best new-orders reading since 2022, jobless claims have firmed, and there is more high-tier data incoming once shutdown-related delays clear. If that data keeps surprising to the upside, the probability of fewer cuts increases, which mechanically supports the dollar leg in USD/JPY through yield differentials. The recent rebound from 152.0 toward 156.0 is consistent with that repricing: the pair had been sold aggressively on narrative, not numbers, and now the macro tape is forcing shorts to reassess.

BoJ, Japanese Politics And Why The Yen Side Stays Heavy In USD/JPY

On the yen side almost nothing has shifted in a way that would justify a structural JPY bull phase. The central bank kept rates unchanged at the last meeting and only nudged growth and inflation forecasts higher on the back of expansionary fiscal policy. Forward guidance stayed vague: rates may rise further if the outlook is delivered, and April price behavior will be a key data point for any next move. That keeps the policy rate near zero while the US stays multiple percentage points higher. Meanwhile politics pushes the same direction. Japan heads into a snap lower house election on 8 February, with the prime minister openly calling a weak yen a “significant advantage” for exporters. At the same time she is proposing to suspend consumption tax on food, which raises questions about long-term fiscal discipline. That combination – tolerance for a soft currency and looser fiscal stance – is not something that attracts safe-haven flows into JPY. Investors looking at that landscape have little incentive to fight a strong trend in USD/JPY unless the finance ministry explicitly threatens or executes intervention. Until then, the structural drivers still favor higher levels, not a sustained yen recovery.

Carry Trade, Positioning And The 160.00 Intervention Ceiling In USD/JPY

The core engine behind the multi-year uptrend in USD/JPY remains the carry trade. Institutions borrow cheaply in yen, convert into dollars, and buy higher-yielding US assets, hedging currency risk by being long USD/JPY. This has been in place since the Fed started hiking in 2022. That is why the pair exploded from the 110–120 bands toward 150.00, then later probed the 160.00 region. Each time the rate spread and hunt for yield pulled capital out of JPY and into USD. Japan’s problem is that this mechanism can run too far. A collapsing currency risks importing inflation faster than the economy can handle, forcing the BoJ into unwanted hikes. That is exactly why authorities stepped in near 150.00 in 2022 and then around 160.00 in 2024, with interventions in April and July that stopped the advance and knocked USD/JPY sharply lower. Those episodes set a very clear psychological cap near 160.00. Every time price gets into the high-150s, traders know the probability of an official response rises. If you are long at 159.0 and an intervention hits, you risk a multi-figure drop in minutes. That asymmetry is why the current rally, while powerful, is likely to face heavy supply as 159.0–160.0 comes back into view. Carry remains attractive while US yields are high, but the higher the pair pushes, the more fragile those longs become because they sit directly under an intervention overhang.

Short-Term Technical Map: 154.50–156.50 As Pivot For USD/JPY

Shorter-term charts show how stretched and yet resilient this move has become. On the four-hour view, USD/JPY has trended almost straight up from its low near 152.0, closing a prior gap and breaking above it, then grinding into the 155.5–156.0 band. That area now clusters several important references: a prior resistance shelf from earlier in the advance, the 0.5–0.618 Fibonacci retracement of the last drop with 155.67 and 156.51 as anchors, and the four-hour 200-period moving average. Intraday price action has carved a rising wedge, which typically signals slowing momentum even when the direction is still up. Momentum confirms that cooling. On the one-hour chart RSI is sitting around 66, rich but not yet at classic blow-off extremes, while the daily RSI has bounced from near oversold back toward the mid-range after the selloff. That profile fits a market shifting from panic liquidation to controlled re-risking. On the daily, price is oscillating around the 15- and 20-day moving averages, which remain upward sloping. The pair briefly slipped below them during the flush and is now fighting to hold above. If spot can sustain closes north of the 155.5–156.0 cluster, those averages will flip back into clean dynamic support; failure there opens the door for another leg down to retest deeper structures. From a pure level perspective, 154.45–155.00 is the first demand band worth watching on pullbacks, given its history as a key breakout zone. Below that, supports stack at 154.83, then 153.78, followed by 152.12, the recent multi-month low. On the topside, resistance steps out at 156.51, then 157.62, then the high-beta band around 159.0–159.24 ahead of the 160.0 intervention line.

Medium-Term Structure: Trend Still Up, But Now Under Audit In USD/JPY

From a trend-structure standpoint, USD/JPY still prints higher highs and higher lows on the weekly chart, powered by the same rate differential that drove the parabolic legs of 2022, 2023, 2024 and the latest surge from April last year into early 2026. Those legs, however, have not been smooth. Each time the market crowds into the long side, it becomes extremely vulnerable to even a modest change in narrative. That is what the latest flush captured: a de-leveraging event triggered by policy comments, intervention chatter and tactical profit-taking into a crowded position. The fact that price found support again above 152.0 – well above the 140.0 base where the last big panic exhausts – suggests that structurally the bull trend has not been damaged. The current phase is better described as trend assessment than trend reversal. The 155.0–155.5 zone now acts as a validation line. Holding above that band keeps the medium-term story intact: carry remains attractive, US data is firm, BoJ normalization is glacial, and political incentives in Tokyo still favor a soft currency. Losing that band on a sustained basis would upgrade the risk of a deeper correction toward 152.0 and potentially the earlier 140.0 floor if US data rolls over or if the Fed’s new leadership radically changes course. For now the macro backdrop does not point to that extreme; labor market prints, ISM surveys and trade flows still lean toward US resilience, while Japanese policy remains designed to avoid a hard tightening that would choke growth.

Directional Stance On USD/JPY: Buy, With Strict Levels And Intervention Risk

Given the current mix of macro and technical signals, the stance on USD/JPY is still bullish, but it must be precise rather than complacent. With spot near 155.8–156.0, the pair is trading just under a heavy resistance cluster, with overbought intraday readings and a visible rising wedge. That argues against chasing impulsive longs at market right under 156.5 and 159.0–160.0. The risk-reward is better on controlled dips as long as the structure above 154.5–155.0 holds. A reasonable plan in this environment treats USD/JPY as a buy on pullbacks while the pair stays above roughly 154.5, targeting a re-test of 157.6 first and then 159.0–159.2, knowing that any approach to 160.0 will likely attract sharper official rhetoric and potentially direct intervention. A daily close back below 154.5, and especially a break through 153.8, would flip the tone from trend continuation to broader consolidation, with 152.1 as the next magnet and 150.0 not out of the question if the move accelerates. Against that map, the data and policy flows still tilt the balance toward the upside. The US side enjoys stronger growth prints, a hawkish potential Fed chair, and a market that may have gone too far in pricing cuts. The Japanese side remains pinned by low rates, election-driven tolerance for a weak yen, and only very gradual normalization. That combination justifies a Buy bias on USD/JPY, but only with respect for the 155.0–156.5 pivot, the 154.5 downside line in the sand, and the 159.0–160.0 intervention ceiling that has already punished greedy bulls more than once.

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