Japanese Yen Weekly Forecast: USD/JPY Extends Losses on Rate Outlook

Published: February 15, 2026

Author: Bob Mason

Key Points

• USD/JPY plunged 2.9% due to hawkish Bank of Japan (BoJ) signals and softer US CPI.
• Upcoming Q4 GDP, trade data, and inflation could solidify April BoJ rate hike expectations.
• US economic indicators and Fed Minutes may reshape June rate cut odds and influence USD trends.

Market Overview

The USD/JPY currency pair experienced a significant decline of 2.9%, closing at 152.629. This drop is attributed to a combination of factors including intervention warnings, a hawkish stance from the BoJ, and a decrease in US inflation rates. The recent reversal marks the largest since November 2024, indicating a bearish outlook for the pair in the short to medium term.

Political and Economic Context

Prime Minister Sanae Takaichi's recent electoral victory has provided political stability, allowing her to pursue fiscal policies without needing to compromise with smaller parties. This has alleviated concerns regarding Japan's debt-to-GDP ratio. Consequently, the yields on 10-year Japanese Government Bonds (JGBs) have decreased from their January highs, enhancing demand for the yen.

Upcoming Economic Indicators

Key economic indicators to watch include:

• Q4 GDP Data: Expected to show a 0.4% quarter-on-quarter growth, which could bolster expectations for a BoJ rate hike.
• Trade Data: A forecasted 12% year-on-year increase in exports for January could signal economic momentum.
• Inflation Figures: A slight drop in headline inflation from 2.1% to 1.9% is anticipated, but core inflation remains above the BoJ's target.

US Economic Calendar

US economic data will also play a crucial role in determining the USD's strength. Key reports include:

• FOMC Minutes: Insights into the Fed's focus on labor market versus inflation could influence rate cut expectations.
• Core PCE Price Index: Expected to rise, which may temper expectations for a June rate cut.
• Q4 GDP Data: Forecasted growth of 3% could impact USD demand.

Market Outlook

The medium-term outlook for USD/JPY suggests a continued decline towards 150, driven by expectations of multiple Fed rate cuts and a hawkish BoJ. However, potential upside risks include aggressive fiscal spending announcements from Takaichi and stronger US economic data.

Technical Analysis

From a technical perspective, USD/JPY is currently trading below its 50-day Exponential Moving Average (EMA) but above the 200-day EMA, indicating a bearish near-term trend. A break below the 200-day EMA could further confirm the bearish outlook.

Conclusion

In summary, the USD/JPY pair is facing downward pressure due to a combination of domestic and international economic factors. Key levels to watch include 150 and 140 on the downside, and 158 and 160 on the upside.