The USD/JPY pair remained range-bound, awaiting a stress test.
2026-02-17 09:35:56
During Tuesday's Asian session, USD/JPY encountered resistance near 153.75 and retreated to the 153.25-153.20 area.
The previous rebound failed to continue, indicating that selling pressure remains. The market remains highly wary of potential coordinated intervention by Japan and the US to curb excessive yen depreciation, which is psychologically suppressing the exchange rate's upward movement.
Meanwhile, the divergence in interest rate paths between the Bank of Japan and the Federal Reserve has limited the upside potential of USD/JPY. The Bank of Japan is still in the process of policy normalization, while the Federal Reserve faces pressure to cut interest rates this year due to declining inflation.
However, Japan's fourth-quarter GDP performance fell short of expectations, reducing the urgency for the Bank of Japan to raise interest rates further, which to some extent limited the aggressive positioning of yen bulls.
Meanwhile, a generally positive global risk appetite weakened demand for the safe-haven yen, providing marginal support for USD/JPY. As for the US dollar, despite improved risk appetite, market expectations of a shift in Federal Reserve policy dampened buying momentum.
Investors widely expect the Federal Reserve to begin cutting interest rates this year, and the FOMC meeting minutes to be released this week may provide more clues about the interest rate path.
In addition, US durable goods orders, housing data, and global PMI data may provide new drivers for exchange rates in the latter part of the week.
Overall, the current macroeconomic background suggests that USD/JPY lacks momentum for a trend breakout and is more likely to trade in a weak and volatile manner in the short term.
From a daily chart perspective, USD/JPY is facing significant resistance around the 153.75 area, which is close to the recent rebound high. The price has tested this level multiple times without success, indicating that bearish momentum is gradually strengthening at higher levels.
If the exchange rate breaks below the 153.00 level, the next support levels to watch are 152.50 and 152.00; a breach of 152.00 could open up further downside potential.
On the upside, only a firm hold above 153.75 and a break above 154.00 can restore short-term bullish momentum. Currently, the RSI is in the neutral-to-weak zone, and momentum indicators have not shown significant oversold signals, suggesting further downside potential.
Taking into account both fundamental and technical factors, the short-term trend of USD/JPY is biased towards the downside, but the movement is likely to unfold in a volatile manner.
Editor's Note:
The USD/JPY pair is currently in a complex environment intertwined with policy maneuvering and expectations of intervention. Japan's policy normalization trend and potential intervention risks limit upside potential, while expectations of US interest rate cuts weaken support for the dollar.
Unless the FOMC minutes release a clearly hawkish signal, the exchange rate is unlikely to sustain its upward trend. However, a rapid rebound due to changes in risk sentiment should be watched closely.
The previous rebound failed to continue, indicating that selling pressure remains. The market remains highly wary of potential coordinated intervention by Japan and the US to curb excessive yen depreciation, which is psychologically suppressing the exchange rate's upward movement.
Meanwhile, the divergence in interest rate paths between the Bank of Japan and the Federal Reserve has limited the upside potential of USD/JPY. The Bank of Japan is still in the process of policy normalization, while the Federal Reserve faces pressure to cut interest rates this year due to declining inflation.
However, Japan's fourth-quarter GDP performance fell short of expectations, reducing the urgency for the Bank of Japan to raise interest rates further, which to some extent limited the aggressive positioning of yen bulls.
Meanwhile, a generally positive global risk appetite weakened demand for the safe-haven yen, providing marginal support for USD/JPY. As for the US dollar, despite improved risk appetite, market expectations of a shift in Federal Reserve policy dampened buying momentum.
Investors widely expect the Federal Reserve to begin cutting interest rates this year, and the FOMC meeting minutes to be released this week may provide more clues about the interest rate path.
In addition, US durable goods orders, housing data, and global PMI data may provide new drivers for exchange rates in the latter part of the week.
Overall, the current macroeconomic background suggests that USD/JPY lacks momentum for a trend breakout and is more likely to trade in a weak and volatile manner in the short term.
From a daily chart perspective, USD/JPY is facing significant resistance around the 153.75 area, which is close to the recent rebound high. The price has tested this level multiple times without success, indicating that bearish momentum is gradually strengthening at higher levels.
If the exchange rate breaks below the 153.00 level, the next support levels to watch are 152.50 and 152.00; a breach of 152.00 could open up further downside potential.
On the upside, only a firm hold above 153.75 and a break above 154.00 can restore short-term bullish momentum. Currently, the RSI is in the neutral-to-weak zone, and momentum indicators have not shown significant oversold signals, suggesting further downside potential.
Taking into account both fundamental and technical factors, the short-term trend of USD/JPY is biased towards the downside, but the movement is likely to unfold in a volatile manner.
Editor's Note:
The USD/JPY pair is currently in a complex environment intertwined with policy maneuvering and expectations of intervention. Japan's policy normalization trend and potential intervention risks limit upside potential, while expectations of US interest rate cuts weaken support for the dollar.
Unless the FOMC minutes release a clearly hawkish signal, the exchange rate is unlikely to sustain its upward trend. However, a rapid rebound due to changes in risk sentiment should be watched closely.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
