Weaker-than-expected Japanese GDP figures supported a short-term rebound in the USD/JPY exchange rate, but expectations of a Fed rate cut limited upside potential.
2026-02-16 10:00:29
The US dollar rebounded briefly against the Japanese yen (USD/JPY) during Asian trading hours on Monday, returning above the 153.00 level after receiving support from weaker-than-expected Japanese economic data.
According to data released by Japan's Cabinet Office, GDP is projected to grow by 0.1% quarter-on-quarter in the fourth quarter of 2025, an improvement from the 0.7% contraction in the previous quarter, but still below market expectations.
This result weakened market bets on an immediate interest rate hike by the Bank of Japan, while also putting some pressure on the yen in the short term. Relatively positive market risk appetite also diminished the yen's safe-haven appeal, providing upward momentum for the USD/JPY exchange rate.
In addition, the Japanese prime minister may use weak economic data to push for more fiscal stimulus measures, but the market generally believes that his policies will remain cautious.
This means the Bank of Japan may still proceed with its policy normalization plan as scheduled, which could provide support for the yen in the long term. On the other hand, the US dollar is under pressure.
Last week's US January CPI data showed that overall prices rose 0.2% month-over-month, while core CPI rose 0.3%, both in line with or below market expectations. This moderate inflation data strengthened market bets on a Federal Reserve rate cut in June.
According to the CME Group FedWatch tool, investors have significantly increased their expectation of an interest rate cut, weakening the momentum for continued dollar bullish momentum.
In summary, Japanese economic data is putting short-term downward pressure on the yen, but the dollar lacks upward momentum due to the potential interest rate cut by the Federal Reserve. In the short term, the USD/JPY pair may maintain a fluctuating rebound trend.
On the daily chart, USD/JPY remains within its recent upward channel, with the current price slightly above the 20-day moving average, forming short-term support around 152.80.
If prices continue to rise, 154.00 and 154.50 will become resistance levels. A break above these resistance levels could trigger further gains, but the Fed's policy direction needs to be monitored.
On the 4-hour chart, the exchange rate has rebounded from a low of 151.50 to above the 153 level. The short-term moving averages are in a bullish alignment, but the Relative Strength Index (RSI) is approaching the overbought zone, suggesting a possible short-term correction.
Initial support is seen at 152.80, followed by 152.50; resistance levels are at 153.50 and 154.00. The overall trend remains bullish, but its sustainability needs to be assessed in conjunction with fundamental factors.
Editor's Note:
From a fundamental perspective, Japan's weak economic growth is a short-term negative factor for the yen, while moderate US inflation data has increased market expectations for interest rate cuts, limiting the upside potential of the dollar.
This means that although the USD/JPY exchange rate has rebounded in the short term, it lacks sustained momentum. Attention should be paid to developments in Japan's fiscal stimulus policy and signals from the Federal Reserve's interest rate decision.
According to data released by Japan's Cabinet Office, GDP is projected to grow by 0.1% quarter-on-quarter in the fourth quarter of 2025, an improvement from the 0.7% contraction in the previous quarter, but still below market expectations.
This result weakened market bets on an immediate interest rate hike by the Bank of Japan, while also putting some pressure on the yen in the short term. Relatively positive market risk appetite also diminished the yen's safe-haven appeal, providing upward momentum for the USD/JPY exchange rate.
In addition, the Japanese prime minister may use weak economic data to push for more fiscal stimulus measures, but the market generally believes that his policies will remain cautious.
This means the Bank of Japan may still proceed with its policy normalization plan as scheduled, which could provide support for the yen in the long term. On the other hand, the US dollar is under pressure.
Last week's US January CPI data showed that overall prices rose 0.2% month-over-month, while core CPI rose 0.3%, both in line with or below market expectations. This moderate inflation data strengthened market bets on a Federal Reserve rate cut in June.
According to the CME Group FedWatch tool, investors have significantly increased their expectation of an interest rate cut, weakening the momentum for continued dollar bullish momentum.
In summary, Japanese economic data is putting short-term downward pressure on the yen, but the dollar lacks upward momentum due to the potential interest rate cut by the Federal Reserve. In the short term, the USD/JPY pair may maintain a fluctuating rebound trend.
On the daily chart, USD/JPY remains within its recent upward channel, with the current price slightly above the 20-day moving average, forming short-term support around 152.80.
If prices continue to rise, 154.00 and 154.50 will become resistance levels. A break above these resistance levels could trigger further gains, but the Fed's policy direction needs to be monitored.
On the 4-hour chart, the exchange rate has rebounded from a low of 151.50 to above the 153 level. The short-term moving averages are in a bullish alignment, but the Relative Strength Index (RSI) is approaching the overbought zone, suggesting a possible short-term correction.
Initial support is seen at 152.80, followed by 152.50; resistance levels are at 153.50 and 154.00. The overall trend remains bullish, but its sustainability needs to be assessed in conjunction with fundamental factors.
Editor's Note:
From a fundamental perspective, Japan's weak economic growth is a short-term negative factor for the yen, while moderate US inflation data has increased market expectations for interest rate cuts, limiting the upside potential of the dollar.
This means that although the USD/JPY exchange rate has rebounded in the short term, it lacks sustained momentum. Attention should be paid to developments in Japan's fiscal stimulus policy and signals from the Federal Reserve's interest rate decision.
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