USDJPY buyers resume activity after holding key support

USDJPY is showing a recovery amid weak inflation in Tokyo and expectations of a pause in BoJ policy tightening. The current price is 156.29. Details — in our analysis for 26 December 2025.

USDJPY forecast: key takeaways

• The Japanese yen remains under pressure amid slowing inflation in Tokyo
• Tokyo’s annual inflation rate fell to 2.0% in December, the lowest level in more than a year
• Slowing inflation increases uncertainty regarding the timing of further BoJ policy tightening
• USDJPY forecast for 26 December 2025: 157.45

Fundamental analysis

USDJPY is showing a recovery after declining for three consecutive trading sessions. Sellers failed to secure a breakout below the key support level at 155.75, which triggered renewed buying activity.

The Japanese yen came under pressure amid a slowdown in inflation in Tokyo, reinforcing expectations that the Bank of Japan may pause its rate-hiking cycle. Tokyo’s annual inflation rate slowed to 2.0% in December, marking the lowest reading in more than a year. The decline was mainly driven by easing price pressures in food and energy components.

Tokyo inflation is regarded as a leading indicator of nationwide inflation dynamics and is closely monitored by the regulator. Its slowdown increases uncertainty around the timing of further monetary policy tightening by the Bank of Japan, which continues to weigh on the yen and supports a bullish outlook for USDJPY.

USDJPY technical analysis

USDJPY has consolidated above the upper boundary of the descending channel. Despite the previous bearish impulse, buyers managed to hold prices above the EMA-65, indicating a significant slowdown in bearish pressure and a potential shift in market dynamics.

The USDJPY forecast for today suggests further upside with a target at 157.45. Additional confirmation of the bullish scenario comes from the Stochastic Oscillator: its signal lines have turned upward after rebounding from the oversold zone, indicating renewed buying pressure.

A sustained breakout and consolidation above the 156.15 resistance level would strengthen bullish positions and confirm the potential for continued upward movement toward new local highs.

Summary

USDJPY technical analysis points to a sustained bullish bias, with the potential for further growth toward the 157.45 level amid slowing inflation in Tokyo, which continues to pressure the Japanese yen.

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