The US Dollar stayed in the low 152.00s against the Japanese Yen and traded near 153.00 on Thursday. Strong US jobs data lowered expectations for near-term Federal Reserve rate cuts, which helped support the Dollar.
US Nonfarm Payrolls for January showed 130K jobs added, above the 70K forecast. The unemployment rate fell to 4.3% from 4.4% in December.
Job gains were uneven. Healthcare added more than 80K jobs. Separately, 2025 job data was revised sharply lower to 181,000 net jobs from 584,000.
The Yen was the strongest G8 currency this week and was on track for its best week in over a year. Markets reacted to Prime Minister Takaichi’s election win and expectations for a stable government.
Markets also watched the likely impact of proposed stimulus programmes and tax cuts. Expectations for Bank of Japan rate hikes rose, with markets pricing in a move as soon as March and one or two more hikes this year.
Bank of Japan policy, Japan–US bond yield gaps, and overall risk sentiment are key drivers of the Yen. The Bank has sometimes intervened in FX markets. Shifts in BoJ policy have also moved the Yen, including during 2013–2024 and again after 2024.
We are seeing USD/JPY consolidate around 153.00. Wednesday’s stronger-than-expected US jobs report is supporting the Dollar. However, the large downward revision to 2025 job numbers—from 584,000 to 181,000—points to weaker underlying momentum. This push and pull may cap gains in the near term.
The main story is the stronger Japanese Yen. It is heading for its best week in over a year after Prime Minister Takaichi’s election win. Futures markets now price an 85% chance of a 10 bp hike at the March 19 BoJ meeting. That would be the third hike since the BoJ ended negative rates in 2025. Rising hike expectations should be a strong headwind for USD/JPY.
In the coming weeks, it may make sense to treat any USD strength into the mid-153.00s as a chance to build bearish positions. Implied volatility for options expiring after the March central bank meetings is rising, showing the market expects a bigger move. Buying USD/JPY puts or using put spreads can offer defined risk exposure to a policy-driven decline.
We have seen similar setups before, especially in late 2023, when strong headline data hid a cooling trend that later showed up in revisions. The spread between US and Japanese 10-year government bonds has already narrowed by nearly 30 bp in 2026. That reduces the rate advantage that has supported the Dollar for years and adds to the bearish case for the pair.
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