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    The US dollar strengthens against the Japanese yen as USD/JPY rises above 158.50 following lower jobless claims.

    by VT Markets
    /
    Jan 16, 2026

    Market Dynamics

    Japanese Prime Minister Sanae Takaichi might change fiscal policies, which could lead to a weaker Yen. However, concerns about government intervention may prevent a significant decline. Japan’s Finance Minister, Satsuki Katayama, has warned about taking action against extreme foreign exchange movements. Factors like the Bank of Japan’s policies and bond yield differences also impact the JPY. The Yen is often seen as a safe investment during market volatility, affecting its value against riskier currencies. In January 2025, the US jobless claims rose, boosting the dollar against the yen. The unexpected drop to 198K in claims led many to believe the Federal Reserve wouldn’t cut rates soon. This turned out to be right, as the first rate cut didn’t happen until the third quarter of 2025. Now, in January 2026, things feel similar. US weekly jobless claims are steady at around 212,000. With the Federal Reserve’s key interest rate at 4.75%, the significant difference with the Bank of Japan’s near-zero rate makes dollars more attractive. This ongoing rate gap strongly supports the USD/JPY pair.

    Trading Strategy

    Prime Minister Takaichi won the snap election in early 2025, but the following fiscal stimulus did not help the yen much. Authorities stepped in when the USD/JPY pair passed the 160 level later that year, creating a key resistance point. This past makes traders cautious about pushing the pair too high too fast. Considering the current environment, the strategy for the coming weeks is to buy USD/JPY on any dips since the interest rate situation hasn’t changed. With the pair now around 162.50, the memory of the 2025 intervention is significant. Using options, like buying puts, can be a smart way to protect against the risk of a sudden reversal from official actions. Create your live VT Markets account and start trading now.

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