Japanese Yen Forecast: USD/JPY on the Verge of a Potential Breakdown

USD/JPY Key Points

• Tariffs and trade wars are taking a back seat to US-Russia peace discussions in Riyadh today.
• USD/JPY is trading more than 700 pips below its mid-January high, just above key support in the mid-151.00s
• If the support zone is broken with a definitive move below 151.00, bears will take the upper hand and look to drive USD/JPY below 150 toward the 50% Fibonacci retracement near 149.00 next.

It’s been a quiet (holiday-delayed) start to the week for US traders, with major indices relatively flat and major currencies mostly marking time against one another.

For many traders, the focus is on the potential for a peace deal between Russian and Ukraine, with high-level talks taking place between the US and Russian lieutenants in Riyadh today. However, readers should not expect an immediate resolution this week, as the current discussions are more about setting the groundwork for a more formal palaver between Presidents Trump and Putin next week (with comments from Ukrainian President Zelensky inevitably playing a role in the discussions as well).

The other major theme driving the US dollar in recent weeks – tariffs and a potential global “trade war” – has taken a backseat as traders await more details on Trump’s “reciprocal tariffs” and tick down the days until next month when tariffs on Mexico, Canada, and broad tariffs on steel and aluminum could come back into play.

Japanese Yen Technical Analysis – USD/JPY Daily Chart

Source: StoneX, TradingView

Keying in on USD/JPY, we can see the broader trend of US dollar weakness on the back of delayed tariffs in more detail. The pair is trading more than 700 pips below its mid-January high, just above key support in the mid-151.00s where the 2025 low and 38.2% Fibonacci retracement of the September-January rally converge.

If the support zone is broken with a definitive move below 151.00, bears will take the upper hand and look to drive USD/JPY below 150 toward the 50% Fibonacci retracement near 149.00 next. Meanwhile, any bullish move would have to exceed the 50-day EMA around 154.00 before buyers would start to grow more optimistic that the pair could retest its recent highs.

With little in the way of top-tier Japanese data on the economic calendar, traders will focus on developments out of the US, including updates on the US-Russia peace talks, tomorrow’s FOMC minutes, and Thursday’s update on initial unemployment claims.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX