The USD/JPY has dropped below 155.00, currently trading around 154.90 during European hours. It’s testing immediate support at the nine-day EMA of 154.85, while resistance is seen at approximately 156.00, marking the upper boundary of a descending channel.
After three days of gains, USD/JPY is pulling back. The technical signals hint at a possible bullish reversal near the channel’s top. However, the 50-day EMA at 155.63 could hinder recovery efforts, acting as a barrier for upward movement.
Market Analysis
The 14-day RSI shows neutral conditions at 46, indicating stable momentum. To shift the current downtrend, USD/JPY must rise above the 50-day EMA. If it fails, further declines may take it to 150.02, which is the three-month low, or even lower to 149.20.
Comparatively, the Japanese Yen is steady against the Australian Dollar but experiencing slight losses against major currencies like the USD and GBP. It has decreased by 0.11% against the USD and 0.19% against the GBP, while its value compared to the CAD has shifted by -0.02%.
As of February 2, 2026, USD/JPY is around 154.90, at a key pivot point in a descending channel. The market shows indecision, with the nine-day moving average flattening and momentum indicators remaining neutral. This situation hints at a significant price move potentially on the horizon.
This price stability largely results from strong economic data from the United States. January’s Non-Farm Payrolls report, released last Friday, revealed an impressive addition of 210,000 jobs, far exceeding expectations. Furthermore, the latest CPI data indicates core inflation remains at 3.1% annually, making it improbable for the Federal Reserve to signal rate cuts soon.
Market Strategy
On the other side, the Bank of Japan is sticking to its ultra-loose monetary policy. During their last meeting in late January, officials showed no signs of changing this approach, particularly due to disappointing wage growth figures from late 2025. This difference in policy between the US and Japan continues to support the USD/JPY pair.
We recall the sharp fluctuations throughout 2025, when comments from Japanese officials led to temporary pullbacks from higher levels. This history suggests that the current tight range may be building energy for a volatile breakout. The Relative Strength Index recovering from oversold levels supports the idea that bearish pressure is easing, possibly setting the stage for an upward move.
A sustained break above the 156.00 resistance would indicate a bullish reversal and could trigger buying call options. Such a move would create an opportunity to retest the highs around 161.00 seen in the summer of 2024. Traders might use bull call spreads to manage risk while positioning for this potential upward shift.
On the flip side, if there is no upward movement and USD/JPY closes below 154.85, the bearish sentiment would persist. This could lead traders to buy put options targeting the late January low near 150.00. Due to the market’s coiled nature, a long straddle option strategy could also be a good bet to benefit from a significant price move in either direction.
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