USD/JPY Price Forecast - USDJPY=X Jumps Back Above 154 as Warsh Nomination Recharges Dollar Bulls

Macro backdrop for USD/JPY around 154

USD/JPY is trading in the mid-154s after a sharp recovery from lows near 152.10 earlier in the week, reflecting a clean shift in macro narrative rather than a random bounce. On the US side, the Chicago PMI for January jumped to 54 from 43.5, smashing the 44 consensus and signaling a clear improvement in activity momentum. Producer prices for December reinforced that message: headline PPI rose 0.5% month-on-month versus 0.2% expected, with the year-on-year rate at 3.0% against a 2.7% forecast. Core PPI ex-food and energy printed 0.7% month-on-month and 3.3% year-on-year, beating the 0.2% and 2.9% estimates. Those numbers are inconsistent with an aggressive, front-loaded Fed cutting cycle and have already pushed markets to scale back the pace and depth of expected rate cuts. Even the slightly softer side of the US data – initial jobless claims at 209k versus 205k expected and 210k prior – still sits in a range consistent with a tight labor market. Layered on top, politics are adding a risk-premium in favor of the dollar rather than against it: President Trump has confirmed Kevin Warsh as his pick to replace Jerome Powell when his term expires in May, and the US Senate has forged a bipartisan agreement to avoid a government shutdown. Warsh is perceived as a relatively hawkish institutional candidate rather than a political dove, which reassures markets about the Fed’s independence and tolerance for higher-for-longer policy. That combination – stronger-than-expected US inflation pipeline, better activity data and reduced fiscal disruption risk – is exactly the cocktail that supports the dollar side of USD/JPY near 154 rather than 150.

Japanese data and BoJ stance keep the yen structurally weak in USD/JPY

On the Japanese side, the macro picture leans in the opposite direction and justifies a soft yen in USD/JPY despite periodic intervention threats. December retail trade missed badly, printing a year-on-year decline of 0.9% against a 0.7% expected increase, signaling that domestic demand is not in a position to absorb aggressive tightening. Tokyo inflation is trending lower rather than higher: the Tokyo CPI ex-fresh food eased to 2.0% year-on-year from 2.2%, and the narrower ex-food-and-energy gauge also slipped to 2.0% versus a 2.2% forecast. Headline Tokyo CPI has cooled to 1.5% after 2.0% in December and 2.8% in November, undershooting the recent trend and easing the urgency for the Bank of Japan to rush into further hikes. Rate markets have reacted accordingly, pushing back the most likely timing of the next BoJ move from March to April and trimming the probability of a near-term surprise. With short-term Japanese rates still pinned near zero and long-term yields controlled, Japan’s real yield profile remains far below that of the US, reinforcing an unfavorable environment for organic yen strength. That is why policymakers are relying on verbal intervention risk – warnings about “excessive” moves and references to past action above key psychological levels – rather than a credible path toward significantly higher domestic yields. The data backdrop of negative retail growth, 2.0% core inflation and 1.5% headline inflation simply does not justify aggressive normalization, and the market is pricing USD/JPY accordingly.

Yield differentials and carry flows underpin the USD/JPY uptrend

The core engine behind the move from 152.10 to the 154–155 area in USD/JPY is yield spread, not only headlines. US Treasury yields continue to sit well above Japanese Government Bond yields across the curve, and with markets now expecting fewer and later Fed cuts after the 0.5% PPI print and 3.3% core PPI, the carry on long-dollar positions remains attractive. The US Dollar index has climbed roughly 4% in the broader complex after the Warsh nomination and strong data, and intraday currency performance tables show the dollar up around 0.96% versus the yen while also outperforming high-beta currencies like the Australian dollar by more than 1.2%. Japan’s decision to move away from strict yield-curve control has not translated into meaningful rate competitiveness; real Japanese yields remain low and unappealing compared with US real yields. As a result, institutional and leveraged accounts have continued to fund in yen and hold long USD/JPY through various carry structures. This positioning amplifies moves whenever macro triggers hit. When US yields rise or Fed pricing leans more hawkish, the pair can squeeze higher quickly, as seen in the nearly 2-big-figure rebound from 152.10 to 154.37–154.50. Conversely, when risk sentiment flips or intervention fears spike, those same crowded long positions can cause abrupt air pockets lower, but the underlying spread structure still favors buying dips rather than selling strength as long as the US PPI and PMI profile stays firm and Tokyo CPI drifts down toward 2%.

Short-term structure: 60-minute channel and W-pattern in USD/JPY

On the 60-minute chart, USD/JPY is climbing within a clear ascending channel, with Friday’s price action around 154.37–154.50 sitting a few pips above the 100-hour moving average and pushing the 14-hour RSI toward overbought territory. The structure is classic trend-up behavior rather than a one-off spike: higher intraday lows from roughly 152.10 through 153.23 into the mid-154s show buyers consistently stepping in on pullbacks. Intraday bulls are watching the 154.50 zone, where multiple analyses identify a broken demand area now acting as resistance. A sustained break and close above that band would open the path toward 155.47 and then 156.59, which are the next logical resistance clusters derived from earlier swing highs and short-term projections. On the 4-hour chart, the price action has printed a clear “W” formation as USD/JPY bounced twice from the 152 handle and then reclaimed the 20-period moving average while the RSI climbed back to the 50 region. That W-pattern argues for a completed corrective phase and a potential continuation of the broader uptrend, as long as the pair holds above the midpoint of the pattern around 152.70–153.00. From a trader’s perspective, the combination of an intraday rising channel, a 4-hour W-bottom and short-term moving averages sloping upward favors a buy-the-dip approach, with the caveat that momentum is already stretched in the very near term and can trigger sharp but temporary pullbacks toward 153.23 or even 152.10 without damaging the bullish micro-structure.

Daily chart map: key zones defining the medium-term path of USD/JPY

Stepping back to the daily timeframe, USD/JPY still trades inside a broader ascending channel, but the balance of risk across levels is more nuanced than the intraday charts suggest. On one side, the upside reference points are well-defined: bulls will be eyeing a move from the current 153.90–154.50 range toward 155.47 and 156.59 in the near term, and beyond that toward the higher daily resistance band around 159.24 and then the major extension area near 163.37 if the dollar leg accelerates. On the other side, the daily chart still remembers the recent pullback: the RSI has already retreated once toward oversold territory on prior swings, and the last broader correction carved out support areas near 149.58 and 145.31. That creates an asymmetry where the trend is up, but there is plenty of room to correct lower without breaking it. For now, the near-field defense line for bulls sits around 152.00–152.10, the recent low and the lower bound of the 4-hour W-pattern. A decisive break under that area would put 149.58 back in focus and signal that a deeper daily correction is underway. As long as daily closes remain above 152 and especially above 153.23, the channel structure argues that pullbacks are opportunities rather than trend changes. Traders with longer horizons should therefore treat 149.58 and 145.31 as extreme downside checkpoints in stress scenarios rather than base-case targets under the current macro setup, which favors the dollar side of USD/JPY.

Policy signals, Warsh nomination and intervention risk in USD/JPY

Macro headlines are not background noise for USD/JPY right now; they are driving risk repricing. The nomination of Kevin Warsh to lead the Federal Reserve reassures investors that the central bank will remain focused on price stability and retain policy independence despite President Trump’s repeated calls for rapid rate cuts. Warsh’s record as a former Fed governor is associated with a preference for pre-emptive tightening, which markets interpret as a “hawkish-leaning” choice compared with a purely political dove. That perception, combined with December PPI at 3.0% year-on-year and core PPI at 3.3%, explains why US yields and the dollar have firmed and why USD/JPY has jumped roughly 0.9% on the day at times to trade around 154.50. At the same time, verbal signals out of Washington and Tokyo add layers of volatility. US Treasury Secretary Scott Bessent has reiterated that Washington is pursuing a strong-dollar policy and denied rumors of a coordinated US–Japan intervention to support the yen, which undercuts the idea that US authorities are uncomfortable with a weak JPY. Japanese officials, however, continue to warn about “excessive” yen depreciation and have a history of stepping in when USD/JPY slices through big psychological levels in thin conditions. That means moves above the upper mid-150s and especially toward the high-150s or 160s can trigger sudden, sharp downside spikes on intervention headlines, even if the fundamental and policy differentials still point higher over the medium term. Traders in USD/JPY must therefore respect both the supportive macro drift for the dollar and the ever-present risk of policy-driven air pockets whenever the pair tests new highs.

Trading scenarios and key levels for USD/JPY in the coming sessions

Near term, the tape in USD/JPY is biased higher but hostage to how the next wave of data and Fed communication interact with BoJ patience and intervention chatter. On the topside, a clean break and hold above the 154.50–154.60 band – the intraday resistance highlighted across multiple analyses – would confirm that buyers have absorbed supply at this level and clear a path toward 155.47. If momentum persists, 156.59 becomes the next logical target, corresponding to prior swing congestion and projection levels derived from the recent 152.10–154.50 leg. Above that, the broader daily structure keeps 159.24 and even the 163.37 region on the radar as potential objectives if US yields continue to grind higher and markets further unwind aggressive cut expectations. On the downside, the first tactical defense zone is 153.23, where short-term buyers have repeatedly stepped in; a break below opens a path back to 152.70 and then the 152.10 low, the base of the W-pattern. Below 152, the character of the move changes, and the 149.58 area becomes the next meaningful daily target, implying a much deeper correction in response to either softer US data, a sudden dovish turn in Fed rhetoric, or a pronounced global risk-off move that unwinds carry trades. Those levels are not arbitrary; they are grounded in actual price reactions, with 152.10 marking the recent swing low, 155.47 and 156.59 aligning with prior reaction highs, and 149.58 and 145.31 matching previous consolidation and breakout zones on the daily timeframe. In that sense the market has already revealed where participants are willing to defend, take profit or flip bias.

Strategic view on USD/JPY: bullish bias and a buy-on-dips stance

Putting all of the data together – stronger US PPI at 0.5% month-on-month and 3.0% year-on-year, core PPI at 3.3%, Chicago PMI at 54, initial jobless claims still near 209k, the Warsh nomination signaling continuity and independence at the Fed, Japanese retail trade contracting 0.9% year-on-year, Tokyo core inflation easing to 2.0% and headline to 1.5%, and a BoJ that markets do not expect to move until at least April – the balance of evidence continues to favor the dollar side of USD/JPY. Technically, the pair is climbing inside an intraday ascending channel, has completed a 4-hour W-pattern from 152.10, and remains in a broader daily uptrend, with immediate resistance at 154.50–155.47 and only a break below 152.00 really threatening that structure. There is legitimate intervention risk above the mid-150s, and momentum is hot enough on short timeframes that chasing every spike is a poor strategy, but the underlying story of positive US-Japan yield differentials and delayed BoJ normalization is intact. On that basis, the stance here is bullish USD/JPY and functionally a Buy rating, best expressed as buy-on-dips rather than blind breakout chasing. Pullbacks into the 153.20–152.70 band and, in a deeper shock, toward 152.10 are areas where the setup aligns: macro data still lean in favor of the dollar, policy divergence remains wide, and the charts show prior demand. A sustained daily close below 152.00 would force a reassessment toward a Hold or even tactical Sell, but as long as the pair holds above that floor and the Fed narrative stays “higher for longer” while Tokyo CPI drifts down around 2%, the evidence supports staying constructively positioned for higher USD/JPY levels over the coming weeks.

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