Market Analysis Summary: USD/JPY Trends and Insights
On February 9, 2026, a detailed analysis by Kelvin Wong highlighted the recent movements in the USD/JPY currency pair, focusing on the implications of political developments and technical indicators.
Key Takeaways
- Sharp Drop and Failed Rebound: The USD/JPY fell below the critical support level of 157.50, reaching a three-month low of 152.09 before a brief recovery attempt that has now stalled.
- Political Impact: Despite a significant election victory for Prime Minister Takaichi, which was expected to weaken the yen, intervention fears have limited the upside for USD/JPY.
- Bearish Technical Signals: A bearish engulfing pattern has formed, indicating potential further declines if the price breaks below 156.36, with targets set at 155.66 and 153.85.
Market Context
The analysis noted that the USD/JPY had previously broken below the 157.50 support level, leading to a rapid decline of approximately 3% within three days. Following this, a recovery was observed, attributed to expectations of a hawkish shift from the newly appointed Fed Chair, Kevin Warsh, and favorable election outcomes for Takaichi's coalition party.
Election Results and Market Reaction
Prime Minister Takaichi's coalition secured a supermajority in the lower house, which theoretically allows for easier implementation of expansionary policies. However, the anticipated sell-off in the yen was short-lived, as the USD/JPY only briefly spiked before declining again, indicating market hesitance.
Intervention Fears
Japanese Finance Minister Katayama's comments about maintaining close communication with the US Treasury Secretary have raised concerns about potential intervention in the currency markets, which has contributed to the yen's strength against the dollar.
Technical Analysis
The analysis included a review of the USD/JPY's technical indicators, noting a bearish engulfing candlestick pattern and a breakdown in the hourly RSI momentum indicator. These suggest a bearish outlook in the short term, with critical resistance at 157.50 and support levels at 156.36, 155.66, and 153.85.
Conclusion
Overall, the USD/JPY is at a pivotal point, with political developments and technical indicators suggesting potential further declines unless key resistance levels are breached. Traders should remain vigilant for signs of intervention and monitor the evolving political landscape in Japan.