US Dollar Continues to Rise Against the Japanese Yen
Author: Taurex | Date: January 9, 2026
Economic Overview
Recent economic data from Japan indicates a concerning trend, with the Tokyo Consumer Price Index (CPI) showing a year-on-year decline of 2.3%. This figure falls short of the anticipated 2.5% and is lower than the previous reading of 2.8%. Additionally, industrial production has decreased by 2.6% month-on-month, surpassing the expected decline of 1.9% and contrasting with a prior increase of 1.5%.
On a more positive note, retail sales have increased by 1% year-on-year, slightly exceeding the forecast of 0.9%, although this is a decrease from the previous year's growth of 1.7%. The services Purchasing Managers’ Index (PMI) has also dropped to 51.6 points, below the expected 52.5 and the previous reading of 53.2, indicating a slowdown in the services sector.
Bond Market Dynamics
In the bond market, there is a notable narrowing of the yield gap between Japanese government bonds and US Treasury yields. Currently, the yield on a ten-year Japanese government bond is approximately 2.088%, while the US ten-year Treasury yield stands at about 4.175%. This results in a yield gap of roughly 2.09%, suggesting a reversal in the carry trade dynamics.
Currency Movement
The US dollar has been on an upward trajectory against the Japanese yen for four consecutive sessions, reaching a value of 157.46 today. This marks an approximate gain of 1% since the beginning of the year. The Bank of Japan has expressed concerns regarding excessive volatility in exchange rates, hinting at a potential intervention to stabilize the yen.
Technical Analysis
From a technical perspective, indicators are providing mixed signals. The relative strength index (RSI) is currently at 60, indicating moderate positive momentum for the dollar/yen pair. Additionally, the Moving Average Convergence Divergence (MACD) has shown a bullish crossover, suggesting the possibility of continued upward momentum.
Should the pivot level at 156.80 be breached downward, potential support levels may be found at 156.52, 156.17, and 155.89. Conversely, if the pivot level is surpassed to the upside, resistance levels are likely to be at 157.15, 157.43, and 157.78.