USD/JPY Price Forecast - USDJPY Slides From 155.65 High as Tariff Shock and Policy Split Pull Pair Toward 154

USD/JPY Price Under Tariff Shock And Policy Divergence

USD/JPY Intraday Slide Around 154.00–155.65

USD/JPY has pivoted from a volatility spike near 155.65 on 20 February to trading closer to 154.35 on 23 February, with intraday lows pressing the 154.00 handle and losses of more than 0.45% on the day. The pair briefly pushed higher on earlier US data but reversed as the tariff narrative flipped from clarity to confusion. That reversal matters because the zone between 154.00 and 155.65 now marks a short-term distribution band rather than a clean continuation range. Every approach toward 155.00–155.65 is meeting heavier supply, while the market is testing how much real demand sits just under 154.00 and down toward 153.60.

USD/JPY Tariff Shock And Safe-Haven Yen Demand

The trigger for the latest leg lower in USD/JPY is the fresh tariff shock. The US Supreme Court struck down the earlier emergency tariff framework and, almost immediately, the White House floated a broad 15% global levy. That combination replaces a known, litigated tariff structure with a far less predictable one. Concerns about retaliation, supply-chain disruption and slower world trade have pushed global risk appetite lower and sent capital back into the classic safety pair: long JPY, short USD. The dollar has slipped about 0.4% against the yen and roughly 0.5% versus the Swiss franc on the day, while European currencies gained around 0.3–0.4%. That is consistent with a “sell America” rotation, where tariff uncertainty hits US assets harder than the rest of the G10 complex and favours the yen even though Japan’s own macro data are far from perfect.

Fed Side: 2.9% CPI, Firm PCE Core And Only One Cut Delivered

On the US side, the macro picture behind USD/JPY is not a clean dovish story. Core PCE for December ran hotter than expected and the latest CPI print for January shows inflation still near 2.9% year-on-year, well above the 2% target. At the same time, US GDP growth slowed sharply to an annualised pace of 1.4% in Q4, confirming that momentum is cooling. Markets came into 2025 expecting two cuts; in reality only one 25-basis-point move came late in the year. As of 23 February 2026, futures still price roughly two cuts for 2026, with the probability of a June move slipping from about 68.6% on 13 February to about 51.1% now. That repricing has supported US yields, but it has not been strong enough to offset the tariff shock and the growing sense that the easing cycle may be slow, uneven and heavily data-dependent. The result is a dollar that is no longer trending aggressively higher, leaving USD/JPY vulnerable when risk sentiment sours.

BoJ And Japan Data: Weak Headline CPI, Firm Core-Core And Services PMI

The yen side of USD/JPY is no longer the one-way funding story it was a year ago. Headline inflation in Japan has cooled sharply: the annual rate dropped from 2.1% in December to 1.5% in January, and core CPI fell from 2.4% to exactly 2.0%, matching the Bank of Japan’s target. That headline softness, combined with weak Q4 GDP, normally would argue against immediate policy tightening. However, the core-core gauge, which strips out fresh food and energy, is still running around 2.6% after 2.9% previously, comfortably above target. At the same time, the services side of the economy is firm. The Japan services PMI edged up from 53.7 in January to about 53.8 in February, with firms reporting higher input costs and a sharper rise in selling prices. Services account for roughly 70% of Japanese output, and that is precisely where the BoJ has been looking for confirmation that underlying inflation is durable. That mix—soft headline CPI but persistent core-core and strong services—keeps an April or mid-year rate move very much alive and supports a medium-term strengthening case for the yen as policy normalises.

Policy Divergence: Narrowing Rate Gap And USD/JPY Carry Risk

The structural story behind USD/JPY now rests on how fast the Fed moves down from restrictive territory versus how fast the BoJ moves up from negative or near-zero. US 10-year Treasury yields dipped below 3.8% during the 2025 risk-off episode; they have since recovered to around 4.2% as of this week. That level still offers carry against Japanese government bonds, but the direction of travel matters more than the static spread. Market debate around the BoJ’s eventual “neutral” rate has shifted into a 1.0–1.25% band on the dovish side versus a 1.5–2.5% band on the more hawkish side. Anything toward the upper band would imply multiple hikes over the next 18–24 months, steadily eating into the yield advantage that has kept USD/JPY elevated near the 150–160 range. At the same time, multiple Fed cuts, even if delivered later than originally expected, would compress the differential from the US side. That combination is exactly what drives many desks to treat rallies above 155.00 more as distribution opportunities than as a fresh breakout.

Risk Sentiment, Cross-Asset Moves And The USD/JPY Macro Context

The tariff shock and rate debate are playing out against a broader “risk recalibration” backdrop. Equity futures in the US are softer, with S&P 500 contracts down close to 0.8% and Nasdaq 100 futures off about 1.0%, unwinding much of the prior session’s rebound. In Europe, the FTSE 100 has pulled back from record territory around 10,745 toward the 10,640–10,580 band as headlines around a 15% global levy hit export-heavy sectors. At the same time, gold has climbed roughly 1.1% to trade above $5,150–$5,200 an ounce and silver has jumped more than 3%, sitting in the mid-$80s. Those metal moves line up with the firmer yen: the market is rotating into defensive assets while trimming exposure to tariff-sensitive names. In that setting, USD/JPY trading lower from 155.65 toward 154.00 is consistent with a classic risk-off allocation rather than an idiosyncratic Japan story.

Short-Term Technical Map: 155.65 High, 154.00 Pivot And 153.62 Support

From a pure price-action angle, USD/JPY has carved out a near-term top just under 155.70, with repeated failures to sustain trade above that zone. The drop toward 154.00 in early Asian dealing and the subsequent bounce to around 154.35 define 154.00 as the first key intraday pivot. A clean break and close below that level opens room toward the mid-November low near 153.62, and from there toward the late-January to early-February floor around 152.27–152.10. Those supports sit close to the rising 200-day exponential moving average, which is the line that separates a simple pullback within a strong uptrend from a genuine trend change. On the topside, any recovery back through 154.50 and 155.00 would still face heavy supply near the February high around 155.65 and the early-January low near 156.12. Without a decisive daily close back above that 156.00–156.50 pocket, short-term momentum remains skewed to the downside.

Medium-Term Structure: Watching 153, 150, 145 And 140 On USD/JPY

The broader structure on the daily chart keeps USD/JPY below its 50-day EMA but still above the 200-day EMA. That configuration signals a bearish bias in the near term, sitting on top of an uptrend that has not yet been fully reversed. The path from here is straightforward in terms of levels. A sustained drop below roughly 153.00 would bring the 200-day EMA into play and serve as the first strong test of trend. A break through that moving average would shift focus toward 150.00, which is both a psychological anchor and a level where past episodes of Japanese intervention chatter have intensified. If 150.00 fails on a closing basis, support zones around 145.00 and then the 140.00 band come into view as medium-term targets over a six- to twelve-month horizon. That 140.00 area aligns with scenarios where the BoJ has delivered several hikes, the Fed has cut multiple times, and carry trades funded in yen have been pared back significantly. On the upside, any move toward 159.00–160.00 would likely meet not only technical resistance but also rising intervention risk from Tokyo, which caps how far the pair can run even if US data surprise to the upside.

Volatility And Options: One-Month Implied Near 12% On USD/JPY

One-month implied volatility on USD/JPY is trading close to 12%, a clear step up from the very subdued regime that dominated much of 2024 and early 2025. That jump reflects optionality demand around both tariff outcomes and central-bank decisions. With implieds this high, markets are paying up for convexity: structures such as long straddles and long strangles around the 154.00–155.00 area seek to capture a sharp move in either direction as policy headlines land. On the other side, those who see a broad 152.00–156.00 range persisting are leaning into short-volatility trades like iron condors, taking advantage of rich premium while defining risk at wings that sit beyond the key technical levels. The elevated pricing also tells you how crowded directional positioning has become: when both hedgers and macro desks are nervous, insurance gets expensive and spot can react aggressively to even modest data surprises.

Macro And Policy Narrative: Fed, BoJ, Tariffs And Safe-Haven Dynamics

The macro narrative that matters for USD/JPY over the next quarter is a three-way tension between Fed timing, BoJ normalisation and tariff policy. On the Fed side, a June cut is still slightly more likely than not, but the probability has dropped toward the 51% region, and markets are walking back the idea of an early, aggressive easing cycle. That keeps Treasury yields supported, but it also means that any downside surprise in US activity data—factory orders, regional Fed surveys, national activity indices—hits the dollar harder now because positioning is no longer one-way short. On the BoJ side, the combination of 2.6% core-core inflation, firm services PMI and rising wage costs makes it difficult to justify keeping policy pinned at emergency settings much longer. Even if the first move is small, any step away from negative rates signals a regime shift for the yen. Tariffs tie the story together: a blanket 15% levy, if implemented and sustained, would weigh on global growth expectations, pressure US equities and favour a stronger JPY alongside stronger gold and Swiss franc. That mix pushes USD/JPY lower in most medium-term scenarios where risk sentiment is fragile.

Positioning, Flows And The Lack Of Classic Insider Signals

Unlike an equity, USD/JPY does not offer a tape of insider share dealings to read. Instead, the closest equivalents are flow data out of futures markets, options positioning, and cross-border bond holdings. Recent price action, with spot sagging from 155.65 to the low-154s while one-month implied volatility rises, suggests that speculative accounts have been trimming long USD/JPY exposure and adding downside protection. At the same time, Japanese institutional flows remain sensitive to hedging costs. As US yields hover near 4.2% and yen hedging becomes less punitive with each basis point of BoJ normalisation priced in, the case for fully hedged foreign bond portfolios strengthens, limiting structural USD buying. Retail margin activity also matters here. Disclaimers from major CFD providers continue to show that around 70–71% of retail accounts lose money in leveraged products. That reinforces how important it is to treat USD/JPY leverage with caution when implied volatility is in double digits and headline risk is elevated.

USD/JPY Verdict: Bearish Bias, Sell Rallies With Clear Risk Lines

Taking the macro, policy and technical picture together, the balance of forces points to a negative bias for USD/JPY over the coming months. Tariff uncertainty is pushing global capital toward safe-haven assets, the BoJ is edging closer to its first genuine tightening step in years with core-core inflation still around 2.6% and services PMI near 53.8, and the Fed is moving toward cuts from a starting point where CPI still prints near 2.9% and GDP has already slowed to 1.4%. Technically, the failure to hold above 155.65, the loss of the 50-day EMA, the pressure building around 154.00 and the open path toward 153.62 and 152.27–152.10 fit a pattern of distribution at the top of a cycle rather than a fresh impulsive push higher. The medium-term roadmap remains a drift toward 150.00, then 145.00 and potentially the 140.00 band over a six- to twelve-month horizon if BoJ normalisation and Fed easing both proceed. Against that backdrop, the stance on USD/JPY is Sell on strength, with rallies into the 155.00–156.00 region treated as opportunities, risk defined above the 159.00–160.00 intervention zone, and downside focus on the 153.00 break, the 200-day EMA, 150.00 and then 145.00. This is a directional view on the pair’s macro and technical setup, not a personalised recommendation, and position sizing and leverage need to reflect the fact that one-month volatility near 12% can translate into sharp intraday swings.

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