The USDJPY found support at 152.500 price level amidst a strong sell-off after Japan’s Prime Minister’s Sanae Takaichi’s election win sparked concerns about potential shifts in the country’s fiscal policy. In response to the event, the USDJPY erased most the previous week’s gains, dropping over 2% as investors appetite for the haven-currency increased.
On the US side, the Dollar found renewed strength after January’s Non-farm Payrolls report surprised to the upside. The economy added roughly 130,000 jobs, while the unemployment rate ticked down to 4.3%.
While the numbers weren’t explosive, they were strong enough to reinforce the idea that the US labor market remains resilient. For traders, that matters. A firm jobs market reduces the urgency for the Federal Reserve to cut rates anytime soon. As expectations for near-term easing faded, US yields edged higher — and USD/JPY followed.
Later in the day, traders will anticipate the US inflation report which is expected to be a catalyst for price movement. The market forecasts inflation to remain sticky which will support the Fed’s position to hold rates in the near-term. If the report comes out hotter-than-expected, it could further dampen expectations of a rate cut and this could see the USDJPY stretch higher. Alternatively, a softer outcome would revive speculations, putting pressure on the US dollar.
Technical outlook
Despite the recent strength on the Yen, the interest rate differentials between the BOJ and the Federal reserve still makes USD more attractive to investors. The USDJPY could be set to resume its bullish run after hitting a key level as the price can be seen within a rising channel that has been in play since April 2025.
The price has found support at 152.500, which coincides with January’s low and has attracted buying interest despite the price consolidating heavily at the level. Further upside movement could be limited at the near-term resistance 153.706 which has kept the USDJPY in a range in the last 48-hours. A clear break of this level could see the price appreciate towards 154.500.
