USD/JPY Forecast Summary - February 23, 2026

In the latest analysis by market analyst Fawad Razaqzada, the USD/JPY currency pair is experiencing a volatile start to the week. The US dollar initially fell but managed to recover slightly, remaining flat as commodity currencies underperformed. The ongoing uncertainty surrounding US trade policies and geopolitical tensions, particularly the threat of military action against Iran, are contributing to the dollar's mixed performance.

Trade Policy Uncertainty

The primary concern affecting the dollar is the ambiguity surrounding US trade policies. Recent announcements of blanket global tariffs by the Trump administration have raised questions about their implications for net export revenues and the US trade deficit. This uncertainty is causing traders to adopt a cautious stance, impacting their willingness to engage with riskier assets.

Market Reactions and Economic Indicators

Despite the initial weakness, the USD/JPY and other currency pairs have shown resilience, bouncing back from earlier lows. Recent economic data has been mixed, with expectations of Federal Reserve rate cuts being postponed. The upcoming Producer Price Index (PPI) report is anticipated to be a key indicator for inflation, which remains a focal point for the Fed's monetary policy decisions.

Key Levels and Forecast

The USD/JPY has been forming lower highs since mid-January, indicating a bearish trend. Key support levels are identified at 154.00 and 152.00, with a significant low at 152.09 that could trigger further declines if breached. On the upside, resistance is noted around 155.00, which aligns with previous recovery attempts. Overall, the forecast leans slightly towards further weakness in the USD/JPY pair.

Conclusion

In summary, the USD/JPY forecast is influenced by trade policy uncertainties, inflation indicators, and geopolitical risks. Traders are advised to monitor key economic releases and market sentiment closely as these factors will play a crucial role in determining the direction of the currency pair in the near term.