Summary of Forex Analysis on USDJPY and JPY Outlook

Date: February 10, 2026

Author: John J. Hardy, Global Head of Macro Strategy

Overview

The article discusses the current state of the US dollar (USD) and Japanese yen (JPY) in the forex market, highlighting the bearish sentiment surrounding the USD and the potential for a JPY recovery following recent political developments in Japan.

Key Points

• USD Weakness: The US dollar has faced renewed selling pressure, particularly after a significant sell-off in the EURUSD pair. The outlook for the USD appears bearish ahead of critical economic data releases, including US Retail Sales, employment reports, and the Consumer Price Index (CPI).
• China's Influence: China has discouraged its banks from holding US treasuries, signaling a desire for a stronger yuan (CNH) to enhance its global standing and encourage its use in trade. This move could lead to further depreciation of the USD against the CNH.
• Japanese Political Landscape: Following a successful election, Prime Minister Takaichi has secured a super-majority, which could have weakened the JPY. However, her commitment to fiscal stability and not increasing government bond (JGB) issuance has reassured markets, leading to increased buying interest in long-term JGBs.
• USDJPY Technical Analysis: The USDJPY pair has encountered resistance post-election, with a critical pivot point at 152.10. A break below this level, followed by 150.00, would indicate a stronger bearish trend for the USD against the JPY.

Market Reactions

The article notes that the JPY's recovery appears tentative, with significant work needed to establish a bearish trend for USDJPY. The market is currently observing the stability of JGBs and the broader implications of USD weakness.

Additional Market Insights

• Sterling Volatility: The British pound (GBP) has shown volatility due to political developments and a dovish stance from the Bank of England.
• Norwegian Krone (NOK): A strong CPI figure from Norway has provided support for the NOK, indicating potential bullish momentum.
• FX Board Trends: The article highlights the broader theme of USD weakness and the evolving strength of the CNH, suggesting a shift in market dynamics.

Conclusion

The analysis presents a cautious outlook for the USD, with potential for the JPY to strengthen if key technical levels are breached. Market participants are advised to monitor upcoming economic data and political developments closely.