The February Shifts of USD/JPY and Future Prospects Trust Company Trust Company
6 min readFeb 22, 2024


So far, USD/JPY has risen in February, temporarily pushing the price above the $150.00 level. As a result, the pair is back at levels that have led to interventions to strengthen the yen in the past. Below is an analysis of some of the catalysts of the recent moves in the pair and an outlook for the near future.

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Ups and Downs in February

USD/JPY has had periods of rising, and when it fell in the previous month. However, an overall look indicates that the pair has increased more than it has declined in February.

USD/JPY for the last 30 days. Source: TradingView

Drivers of the Recent Growth

Dollar strength is the primary reason for the recent rise in USD/JPY. In the past month, the dollar has surged due to positive data from the US. Most economic reports have shown a resilient economy despite high interest rates.

Data on employment, economic growth, and inflation have all beaten forecasts. As a result, the Fed has grown more reluctant to cut interest rates. This, in turn, has boosted the dollar as traders scaled back bets for rate cuts in the US. The stronger dollar has weighed heavily on the yen, raising concerns among Japanese authorities.

Moreover, USD/JPY has risen due to a weaker yen. There has been a gradual decline in expectations for rapid rate hikes when the BoJ eventually shifts its policy. Notably, top policymakers have said the shift in policy might be slower than markets currently expect. Additionally, data from Japan showed that the country slipped into recession as 2023 ended. Consequently, the BoJ might hesitate to hike rates too aggressively. Meanwhile, Tokyo’s inflation, an indicator of nationwide trends, fell.

Factors Behind USD/JPY’s Recent Decline

Though limited, there has been some decline in the USD/JPY pair recently. Some data from the US has shown pockets of weakness in the economy that have temporarily weakened the dollar and pushed the pair lower. Notably, retail sales in the US fell significantly in January, showing consumer spending was weak.

At the same time, although the US has added a significant number of jobs recently, jobless claims have been on the rise, showing some deterioration in the labor market.

Meanwhile, Finance Ministry officials have been vocal in Japan, warning that they are paying close attention to currency moves. These remarks have sometimes strengthened the yen as investors worry about a possible intervention.

Key Economic and Policy Updates from the US and Japan

Several policy and economic changes in the US and Japan have contributed to the recent moves in USD/JPY.

The U.S.

The first major economic report in the US was the GDP, which came in higher than expected. In December, the economy grew much faster at 0.6% when economists expected a decline to 0.2%. Although economic growth in Q4 was slower than in Q3, the figure was much higher than economists had expected. This shows that the economy fared better than expected amid high interest rates.

After the GDP report, there was the nonfarm payrolls report, which revealed a massive increase in employment in January. Economists had expected a drop from the previous month. Additionally, they had expected a rise in the unemployment rate, which held steady at 3.7%.

The most recent major economic report was the Consumer Price Index. This report also came in higher than expected, indicating inflation remains persistent.

On policy, the Fed held its most recent meeting on 31st January, where the central bank kept interest rates. Moreover, policymakers indicated no hurry to cut interest rates as the economy remained resilient. Therefore, the Fed can wait until inflation shows a convincing downtrend to the 2% target.


In Japan, recent major economic releases included the Tokyo CPI report and the country’s GDP report. The CPI report for Tokyo is a leading indicator of inflation in Japan. Notably, the report revealed a significant drop in inflation from 2.1% to 1.6% in January.

Meanwhile, Japan’s Gross Domestic Product figure revealed a contraction in the fourth quarter of last year. This was the third such contraction, showing the economy was in a recession.

Future Outlook for USD/JPY

The upside potential for the dollar remains high as fundamentals point to a delay in rate cuts in the US. If the US economy keeps doing better than expected and inflation remains persistent, the USD/JPY pair could climb higher. Moreover, BoJ policymakers’ messaging, less hawkish than anticipated markets, could continue weighing on the pair.

However, we could see the yen recover as we approach a policy shift in Japan. Additionally, if the pair continues climbing due to dollar strength, Japanese authorities could intervene in the market. This would see the yen strengthen and the pair decline.

Signals and Resistance Levels in Focus

Technical analysis of USD/JPY

On the technical side, it is clear that the bulls have been in the lead for some time. The bullish bias is strong because the price trades above the 22-SMA and respects this level as support. Moreover, the RSI has stayed in bullish territory above 50, showing strong momentum.

Additionally, a look at the price action reveals that bulls are making bigger candles than bears. This is also a sign that bullish momentum is stronger. After a pullback to the SMA, the price recently broke above the 148.50 resistance level. Given the strong bullish bias, the price might soon reach the next resistance level of 152.02.

However, this might be the end of the road for bulls. In the previous bullish trend, the price got to 152.02 before reversing. Bullish momentum gradually weakened as the price got closer to the level. Finally, bulls took over when the price bounced lower and broke below the SMA. This indicates that 152.02 is a solid resistance level. Therefore, the same thing might happen when the price reaches this level.

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