USD/JPY found support near 155.35 on Wednesday after pulling back from a two-week high set the day before. It traded near 155.75, roughly flat on the day, and maintained the upward trend seen over the past week.
The US dollar came under selling pressure despite a hawkish Federal Reserve outlook. Concern over US President Donald Trump’s trade policies, along with broader geopolitical risks, increased safe-haven demand for the yen. This added intraday pressure on USD/JPY.
Technical Outlook And Key Levels
Reports said Japan’s Prime Minister Sanae Takaichi voiced concerns about further rate hikes during a meeting last week with Bank of Japan Governor Kazuo Ueda. Japan also nominated two reflation-leaning members to the BoJ board. These developments reduced expectations for faster rate hikes, which limited yen strength.
From a technical view, repeated rebounds from the 200-day EMA breakout area keep the bias bullish. The MACD has crossed above its signal line and moved back into positive territory. The RSI is near 54 and remains above its midpoint.
Resistance is at 156.90, then 158.40. If 158.40 breaks, 160.00 is the next major level. Support is at 155.00, then 153.50, with 152.70 near the 200-day EMA.
Looking back at our 2025 analysis, the bullish setup we highlighted played out well. USD/JPY broke above the key resistance at 158.40 and later moved through the major 160.00 level that year. This confirmed the underlying strength we saw building and rewarded traders positioned for further gains.
The main drivers of yen weakness have largely stayed in place. As expected, the Bank of Japan has remained cautious. Recent data supports that stance: Japan’s core CPI for January 2026 came in at 1.9%, still slightly below the 2% target. This ongoing shortfall continues to push back expectations of a more hawkish shift from the BoJ.
Strategy And Risk Framework
On the other side, the US dollar is facing headwinds, similar to what began to appear in 2025. US weekly jobless claims rose to 235,000 this month, the highest level in several quarters. This points to a modest cooling in the labor market. As a result, the pair may not rally in a straight line, and dips could offer opportunities.
With the uptrend still in place but the dollar softer, traders may consider buying call options to target further gains while limiting downside risk. With spot trading around 161.50, one approach is to buy out-of-the-money calls—for example, a 163.00 strike expiring in the next few weeks. This offers defined risk while keeping long exposure, and it reduces the impact of a sharp, unexpected pullback.
The 160.00 level, which was our main upside target in 2025, is now an important support zone. Treat this area as a key line in the sand. A sustained break below 160.00 would weaken the near-term bullish view and suggest a deeper correction is developing.
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