USD/JPY Price Forecast: Yen Holds Above 155 as Japan Inflation Cools and Tariff Ruling Jolts the Dollar

USD/JPY around 155 – price action and structure

USD/JPY is holding a tight band around 154.80–155.40 after testing intraday highs near 155.65 and then easing back. The pair has logged three straight up days into this week, recovering from last week’s drop toward 152.50 and printing a fresh one-week high in the 155.35–155.40 zone. On the intraday view it is still running inside an ascending channel, trading clearly above the 100-hour moving average, with the latest pullback helping the short-term RSI cool off from overbought territory rather than signaling a full reversal. The immediate map is clean: short-term support sits around 154.99 and 154.63 on the hourly structure, while the topside pivot remains the 155.65–155.99 band that capped today’s move. As long as USD/JPY trades above the low-155s, the market is treating this as a controlled pause inside an ongoing rebound, not as the start of a fresh down-leg.

Daily chart: trend, moving averages and medium-term levels

On the daily chart, USD/JPY is still trending higher inside a broader ascending channel that has been in place since the 2023–2024 basing phase. The 50-day moving average sits comfortably above the 200-day average, a classical bullish configuration that confirms the uptrend rather than a sideways market. Price is trading well above the rising 200-day EMA around 152.63, which has repeatedly acted as the dynamic floor; recent rebounds from that zone show that bigger players are still defending the structural trend. From the last leg down off the January swing high, the pair has reclaimed the 38.2% Fibonacci retracement and is now probing the 50% level around 155.79. Above that, the 61.8% retracement near 156.64 and the 78.6% area around 157.86 mark the next medium-term resistance layers. On the upside beyond the Fibonacci cluster, previous extension targets and daily channel resistance line up around 157.42 and then closer to 160.07, which is where the market last started to price a serious risk of official pushback. On the downside, structural supports line up first at 154.60 and 153.90, then deeper at 152.84 and the 152.50–152.15 area around the 200-day EMA and prior swing low. Only a sustained break under that 152 area would signal that the multi-month bullish trend is losing control and that the channel has turned into a topping structure.

Momentum gauges: RSI, MACD and what they really signal

Momentum readings confirm a market that has lost the panic of last week’s slide without yet turning euphoric. On the earlier mid-2025 run, daily RSI printed around 62 while USD/JPY sat above 155.00, indicating strong upside momentum with still some headroom before classical overbought territory. After the latest correction, RSI has slipped back toward the 50 zone, which is neutral and consistent with a consolidation phase rather than a trend change. MACD has edged back above its signal line close to the zero axis, and the histogram has turned modestly positive, pointing to an improving but not explosive bullish tone. Taken together, RSI around 50 and MACD barely positive usually point to a market that is rebuilding energy after a shake-out, with upside attempts likely to meet resistance near key retracement levels such as 155.79 and 156.64 but without clear evidence that sellers have regained control.

Short-term structure: intraday channels and tactical levels

On the 60-minute view, USD/JPY is locked inside a rising channel that started from last week’s lows just above 152.50. The latest push to 155.65 stretched the upper boundary and pushed the 14-hour RSI into overbought territory, which triggered the current intraday pullback to around 155.36. Even after that retracement, price remains several steps above the 100-hour moving average, confirming that the short-term bias is still pointed higher. Intraday participants are watching 154.99 and 154.63 as the first meaningful downside checkpoints inside the channel. If the pair holds above those marks, the path of least resistance stays toward a retest of 155.65 and then 155.99. A deeper flush toward 152.84 and 150.31 would only come into play if the channel breaks and daily momentum flips decisively lower, which at this point is a risk scenario, not the base case.

Policy gap: Fed at 5.25–5.50% versus BoJ at –0.10%

The core support for USD/JPY remains the massive interest-rate gap between the United States and Japan. The Federal Reserve keeps the federal funds rate in a 5.25–5.50% range and, despite some softer growth, is still signaling only gradual and limited cuts rather than an aggressive easing cycle. Market pricing continues to assume perhaps two reductions this year, not a rapid normalization back to pre-hiking levels. In contrast, the Bank of Japan is still running a deeply accommodative stance with the policy rate around –0.10% and only cautious talk about normalization. Even with Japanese inflation finally moving closer to target, the central bank is nowhere near a cycle resembling the Fed’s tightening of the past two years. This 5.25–5.60 percentage-point spread between headline policy rates, combined with a 10-year US yield near 4.32% against roughly 0.85% on Japanese government bonds, keeps USD/JPY firmly anchored in a yield-driven bullish regime. As long as that gap stays wide, capital still has a strong mechanical incentive to move out of low-yielding yen and into higher-yielding dollar assets, sustaining demand for the pair on dips.

Japan: softer inflation, export strength and delayed normalization

The latest Japanese macro releases add nuance without breaking the story. Headline national CPI slowed to 1.5% year on year in January from 2.1%, while the ex-fresh-food gauge eased to 2.0% from 2.4%. The narrower core-core measure, stripping out both fresh food and energy, cooled to 2.6% from 2.9%. These are the softest readings since early 2022 and tell markets that the inflation burst is fading, not accelerating. At the same time, January exports jumped 16.8% year on year compared with a 12% consensus, while imports fell 2.5% against expectations of a 3% rise. The merchandise trade deficit improved sharply to about –1.15 trillion yen versus an expected –2.14 trillion and a tiny surplus in December, showing how the combination of weaker yen and overseas demand is helping external balances. This mix weakens the immediate case for rapid rate hikes. The Bank of Japan cannot credibly claim runaway inflation when headline CPI sits at 1.5% and core measures are cooling, and wage growth is still not strong enough to guarantee self-sustaining price pressure. That is why markets are now pushing out expectations for material tightening and assuming a very gradual exit from negative rates. For USD/JPY, that means the most powerful driver of yen strength – a decisive BoJ pivot – is still not on the table, even as disinflation takes some pressure off households and reduces political urgency.

Japan’s fiscal stance and intervention overhang

Japanese policymakers are walking a tightrope between fiscal concerns and currency stability. Public debt remains extremely high, and the government has been signaling an intention to steadily reduce the debt-to-GDP ratio and restore some fiscal sustainability. That message is meant to calm concerns about long-term solvency, but it does not fundamentally change the near-term funding reality: Japan still relies on very low rates to service its obligations without destabilizing finances. That is another reason why the BoJ is cautious about tightening too quickly. At the same time, there is a clear line in the sand on the currency. While outright intervention is not an everyday tool, historical behavior suggests that the risk rises as USD/JPY approaches the high-150s and especially the 160.00 region, particularly if the move is fast. Estimates of foreign-exchange reserves around $1.3 trillion give Tokyo the firepower to act if price action becomes disorderly. The practical implication is that a grind higher from 155 toward 157–158 can still happen under the current regime, but markets will be very reluctant to extrapolate a straight line above 160 without factoring in the probability of official pushback.

United States: mixed growth, firm inflation and fiscal noise

The US side of USD/JPY is no longer a one-way story either. On the growth front, preliminary data show annualized GDP expansion of about 1.4% in the fourth quarter, significantly under the 3.0% consensus and well below the pace seen earlier in the cycle. Business activity indicators from S&P Global point to a mild loss of momentum in February, while the Michigan consumer sentiment index slipped to 56.6 from 57.3, underlining some fatigue at the household level. By contrast, price data remain sticky. Core PCE, the Fed’s preferred inflation gauge, rose 0.4% month on month and about 3.0% year on year in December, overshooting expectations of 0.3% and 2.9%. The headline PCE index also posted 0.4% month-on-month and 2.9% year-on-year gains versus forecasts of 0.3% and 2.8%. That combination – softer growth but firmer inflation – underpins the idea that the Fed cannot rush into aggressive cuts. It also means the yield curve remains relatively elevated despite weakening forward indicators, a configuration that is still broadly supportive for USD/JPY in carry-trade terms. Overlaying this macro picture, the Supreme Court’s ruling against the previous administration’s broad use of “national security” tariffs has injected a fresh layer of uncertainty into the policy backdrop, denting the dollar across the board and reminding markets that the US fiscal and trade configuration is not on autopilot. That ruling contributed to today’s broad dollar softness and helped cap the latest rally in USD/JPY around the mid-155s.

USD/JPY as the pivot of the dollar complex

The recent behavior of USD/JPY relative to the dollar basket shows how central this pair has become for broader FX pricing. Since the start of the 2020s, USD/JPY has rallied close to 50% while the dollar has moved far less dramatically against the euro or the pound. The asymmetry reflects one core reality: yen weakness and the carry trade have been doing much of the heavy lifting for the global dollar narrative. When the pair accelerates higher, the broad dollar index often finds a floor even if EUR/USD or GBP/USD show only modest moves. When USD/JPY suddenly unwinds – as seen during previous sharp drops – the dollar tends to weaken across the board as carry trades are dismantled, triggering crowded exits and lifting other majors almost mechanically. The result is that the path of USD/JPY around 155–158 is now critical for the entire DXY profile. A sustained break above 156.27 and then 157.90 could re-ignite the perception that the dollar is back in a dominant carry regime. A failure around these zones followed by a clean break below 153.67 and 152.50 would flip that narrative and likely translate into a broader dollar setback.

Risk, positioning and the carry trade’s late cycle

Positioning in USD/JPY remains skewed toward the long side after years of exploiting the rate gap. The recent drop to the 152.50 region showed how quickly those positions can be shaken when markets perceive any hint of a BoJ shift or potential coordinated pushback against yen weakness. Yet, the rebound back above 155.00 tells the other half of the story: as long as the fundamental interest-rate gap and structural yield differences remain intact, capital is still ready to rebuild carry exposure after each flush. This is what a late-cycle carry regime looks like. Upside can extend, but every new high brings rising tail risk of a crowded exit triggered by either policy surprise, intervention chatter or a global risk-off event. In practice, that means volatility around levels like 155.80–156.20, 156.64 and 157.86 will probably be higher than simple trend followers assume, with quick squeezes in both directions layered on top of the underlying upward drift.

Trading map: key zones for upside and downside scenarios

From a pure price-level perspective, the landscape is well-defined. On the upside, the immediate resistance band remains 155.80–156.20, which coincides with earlier inflection zones from April 2025 and aligns with the 50% retracement near 155.79. A daily close above that area would validate the recovery and open the door for probes toward 156.64, then 156.27–157.42, and eventually the 157.86 area. Beyond that, any approach to 158.00 and especially the 160.00 handle will be viewed through the lens of intervention risk and stretched carry positioning. On the downside, the first defense lines are intraday supports at 154.99 and 154.63, followed by the 154.60 and 153.90 bands that previously acted as tops and are now potential floors. A decisive break beneath 153.67 would signal that the latest leg higher has failed, exposing 152.84, the 200-day EMA around 152.63, and the 152.15 swing low. Only if those levels give way cleanly does the door open toward a much deeper correction into the 150.31 region and a re-rating of the entire multi-year uptrend.

Bias and verdict on USD/JPY: bullish, but not a blind chase

Putting the technical structure, macro backdrop and positioning together, USD/JPY still skews bullish rather than neutral or bearish while it trades above the 152–153 zone. The rate and yield differentials are intact, Japanese inflation is cooling in a way that argues against fast BoJ tightening, and recent US price data keep the Fed cautious about cutting too quickly, all of which favor a positive carry in favor of the dollar. At the same time, growth momentum in the US is slower, fiscal and trade headlines are injecting volatility, and the pair is now trading in a region – mid-150s with clear sight of 158–160 – where policy and intervention risk are no longer theoretical. The overall assessment is therefore straightforward: the directional bias on USD/JPY is still bullish, effectively a Buy stance as long as pullbacks hold the 153–152 area and the 200-day EMA continues to act as a floor, but it is a late-cycle bullish phase where chasing aggressive breakouts above 157–158 carries significantly higher risk of violent reversals.

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