USD/JPY Price Outlook: Is the Rejection From 155 Sustainable?

Uncertain headlines are ultimately quantified through price action—and in USD/JPY, this dynamic is now clearly visible. The pair’s recent rejection near the 155 support highlights a defining zone between a steep drawdown and a potential recovery, as institutional positioning adjusts to evolving macro risks.

Bank of Japan (BOJ) intervention concerns have pressured USD/JPY toward this key level, with the outlook shaped by a confluence of factors: Hormuz-driven inflation risks, sustained US dollar safe-haven demand, and shifting expectations around US monetary policy.

Should the BOJ step in, markets could once again experience a carry trade unwind, pressuring the US dollar while lifting global currency pairs and increasing volatility across forex markets.

USD/JPY Outlook: Key Drivers Shaping Price Action

• Rising import inflation: Hormuz disruptions and elevated energy costs are intensifying inflationary pressure in Japan, making prolonged yen weakness increasingly difficult to sustain.
• US dollar strength: Safe-haven demand continues to support the dollar, pushing USD/JPY higher and reinforcing one-sided speculative positioning near 160.
• Intervention risk near 160: This level remains politically sensitive, as Japanese officials previously intervened in 2024—triggering a sharp carry trade unwind.
• Policy shift potential: Authorities may intervene through direct yen buying or signal a more hawkish stance, including keeping rate hikes on the table.
• Liquidity risk: BOJ actions often occur during thin Asian trading hours, increasing the likelihood of sharp price spikes, stop-loss runs, and aggressive technical moves.

USDJPY Price Outlook: Weekly Time Frame – Log Scale

Source: Tradingview

To quantify uncertainty through price action, USD/JPY must be assessed across multiple time frames. On the weekly chart, the pair continues to respect a parallel uptrend established since April 2025, holding above the 155 support zone.

This structure is now testing the mid-zone resistance of a broader channel extending from the 2022 lows toward 2026—making this area a pivotal decision point for trend continuation or reversal.

Bullish Scenario: Continuation Above 160

A sustained break and weekly close above 158–160 would confirm renewed bullish momentum. In this scenario, price action could extend toward:

• 166
• 174
• 180

These levels align with Fibonacci projections (0.618, 0.786, 1.0, 1.272) of the broader cycle between the 127 low (2023), 161.70 high (2024), and 140 low (2025), while also coinciding with the upper boundary of the long-term ascending channel.

Bearish Scenario: Breakdown Below 155

Failure to reclaim 160, combined with sustained pressure below the channel mid-zone, increases the probability of a downside move. A confirmed break below 155 would signal a structural shift, opening the path toward:

• 152 (yearly lows)
• 150 (psychological level)
• 147 (channel support)

Such a move would reflect a deeper repositioning in USD/JPY, potentially driven by BOJ intervention or a broader shift in dollar sentiment.

USD/JPY Forecast: 3-Month Time Frame Perspective

Source: TradingView

From a longer-term perspective, the 160 level remains a major historical resistance dating back to the 1990 highs. A confirmed breakout above this zone could unlock a structural rally toward the 180 region, revisiting levels last seen in the late 1970s and reinforcing the broader bullish trend.

On the downside, the 147 level, marking the lower boundary of the 2022–2026 channel, remains a critical support. A break below this level could accelerate losses toward the 140 and 130 ranges, potentially aligning with a broader US dollar index (DXY) breakdown below its long-term 2008–2026 uptrend

Final Thoughts: Price Action as a Measure of Market Truth

While macro headlines around BOJ intervention, inflation, and global risk sentiment continue to drive volatility, price action remains the most reliable measure of market positioning.

In USD/JPY, the reaction around 155 and 160 will define the next major trend—whether through continued dollar strength or a sharp reversal driven by policy intervention and a potential unwind in carry trades.

Written by Razan Hilal, CMT
Follow on X: @rh_waves