USD/JPY rose on Wednesday as the recent Yen rally lost pace. Even so, the Yen is on track for its best weekly performance since November 2024. Expectations for a Bank of Japan rate hike remain, even after weaker GDP data. Recent comments also hinted at an April move, and the IMF again backed Japan’s return to more normal policy settings. Japan’s National CPI data due on Thursday could drive the next move. A strong core reading would likely boost rate-hike bets and support the Yen. A softer reading could allow USD/JPY to extend Wednesday’s rebound.

Usd Jpy Technical Picture

USD/JPY began Wednesday near 153.00 and rose about 1%. The move formed a bullish daily candle, but the pair stalled below the 50-day EMA at 155.30. The 200-day EMA sits near 152.60. That leaves price stuck between the two averages after the drop from the January high near 159.45. The Stochastic Oscillator is rising from oversold levels, which suggests downside momentum is fading. A break above 155.30 could open a move to 156.00 and back into the mid-January range. If the pair fails to clear 155.30, 153.00 may come back into view, along with the year-to-date low at 152.10. The Yen is one of the most traded currencies. It is influenced by Japan’s economy, BoJ policy, the yield gap versus US bonds, and overall risk sentiment. BoJ policy from 2013 to 2024 helped weaken the Yen, but policy changes in 2024 and rate cuts elsewhere have narrowed the 10-year US–Japan yield gap.

Key Drivers And Trade Levels

With USD/JPY stalling below the 50-day moving average at 155.30, this level looks like a key decision point. The recent bounce from 153.00 is starting to fade, which suggests the Yen’s underlying strength still matters. The market also appears to be in a transition period after the sharp fall from the January highs near 159.45. Japan’s National Core CPI, released today, rose 2.2% year over year in January, slightly above expectations. This supports the view that the Bank of Japan is still on track to hike rates. Many traders are now more confident about a move in April, which strengthens the case for a firmer Yen in the weeks ahead. With inflation holding up, the 155.30 resistance level is the main level to watch. If USD/JPY cannot break above it, that would support the idea of buying JPY calls or USD/JPY puts, aiming for a retest of 153.00 support. This also fits with the narrowing rate gap, especially as US jobless claims have edged higher, pointing to a cooling US economy. The policy shift that began when the BoJ started stepping away from ultra-loose policy in 2024 remains the main theme. The multi-year trend of a widening US–Japan yield gap is now reversing, which gives the Yen fundamental support. In this setup, USD/JPY rallies may continue to attract selling. Still, a short-term relief rally is possible, as some technical signals suggest. A clear break and hold above 155.30 could open the way to 156.00. In that case, short-dated USD/JPY call options could be used to benefit from a squeeze higher, though this looks like the lower-probability scenario. Create your live VT Markets account and start trading now.

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