USD to JPY prediction, the future of the USD/JPY currency pair is influenced by various economic factors, technical indicators, and market sentiment.

USD/JPY forecast: the uptrend in USD/JPY remains intact, although recent selling pressure has pulled spot prices down from around 158.80 to current levels. Importantly, sellers have not managed to break below the support trendline established from the September 2024 lows near 154.50. However, if USD/JPY stays below 156.00, a further decline could be anticipated, particularly if the price drops below 155.00. The next support levels to watch would be at 154.50, followed by 154.00.
Conversely, if USD/JPY rises above the Senkou Span A at 156.41, it may pave the way for a test of 157.00. Should this level be surpassed, a surge toward the January 15 high of 158.03 could occur.
 

Fundamental Overview

Upcoming Economic Events:
Tuesday, Jan 21
21:45 GMT: NZD Consumer Price Index (QoQ) - Actual: 0.5%, Consensus: 0.5%, Previous: 0.6%
23:00 GMT: CHF World Economic Forum - Davos
Wednesday, Jan 22
00:00 GMT: AUD Westpac Leading Index (MoM) - Actual: 0.0%, Consensus: 0.1%
07:00 GMT: GBP Public Sector Net Borrowing - Actual: £13.400B, Consensus: £11.249B
11:00 GMT: EUR German Buba Monthly Report
12:00 GMT: USD MBA Mortgage Applications - Actual: 33.3%
13:30 GMT: CAD Industrial Product Price (MoM) - Actual: 0.6%, Consensus: 0.6%
13:30 GMT: CAD Raw Material Price Index - Actual: 0.4%, Previous: -0.5%
13:55 GMT: USD Redbook Index (YoY) - Actual: 4%
15:15 GMT: EUR ECB President Lagarde's Speech
During the North American session on Tuesday, USD/JPY remained virtually unchanged as traders evaluated U.S. President Donald Trump’s threats to impose 25% tariffs on Canada and Mexico starting February 1. The Greenback saw a recovery, reaching a daily high of 156.20, but concerns eased as the pair traded near 155.54, showing little change.
 

Market Sentiment

Market sentiment remains positive, with the U.S. dollar appreciating, as indicated by a 0.29% rise in the U.S. Dollar Index (DXY) to 108.30. Meanwhile, traders in the FX markets are closely monitoring Trump’s rhetoric, which stirred volatility late Monday after he signed a series of executive orders related to illegal immigration and designated cartels as global terrorist organizations.

Additionally, USD/JPY traders are focused on the upcoming Bank of Japan (BoJ) monetary policy meeting. Current interest rate expectations suggest that the BoJ may increase rates by 25 basis points to 0.50% for the first time since July of the previous year.

This week, the U.S. economic calendar is relatively quiet until Thursday, when Initial Jobless Claims data will be released, followed by Friday’s S&P Flash PMIs. In Japan, the agenda includes Trade Balance data and foreign investment figures leading up to the BoJ meeting.
 

Technical Outlook

In last month’s Japanese Yen Technical Forecast, we highlighted that USD/JPY was “approaching major technical resistance, with a focus on potential inflection at this threshold. From a trading perspective, it was advisable to reduce portions of long exposure and raise protective stops upon testing the 157.16/89 levels. Losses should be limited to 152 if the price is moving higher, with a close above this pivot zone necessary to signal a resumption of the September uptrend.”

USD/JPY reached an intraday high of 158.08 the following week but remained below the uptrend resistance for five consecutive weeks. Key resistance has now been adjusted to the April and January high closes at 158.45/88. A breach and weekly close above this threshold are essential to indicate a resumption of the uptrend, targeting subsequent resistance levels at the 1990 high and the 2024 high-week close (HWC) at 160.40/74, as well as the 2024 swing high at 161.95. Expect a more significant reaction if these levels are reached.

Initial weekly support is now identified at the November high close near the 155 handle. Basic channel support is converging on this level over the coming weeks, and a break below this slope would suggest that a more significant high was established last week, indicating a larger reversal may be underway. Further support levels are observed at the 2022/2023 highs and the 52-week moving average around 151.95-152.13, as well as the 2022 high close and 2023 HWC at 148.74-149.36. These levels are critical for possible downside exhaustion or price inflection if reached.
 

Conclusion

As the USD/JPY pair consolidates near the 155.50 mark amid President Trump's proposed tariffs and potential interest rate adjustments from the BoJ, traders should remain vigilant. The interplay of market sentiment, economic data, and geopolitical developments will play a crucial role in determining the future direction of USD/JPY. Keeping an eye on key support and resistance levels will be essential for making informed trading decisions.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. 

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.