USDJPY maintains upward momentum despite the correction

The USDJPY rate is undergoing a downward correction amid increased caution ahead of the Bank of Japan meeting and intensified verbal interventions from Japanese authorities, with the price currently at 158.39. Discover more in our analysis for 16 January 2026.

USDJPY forecast: key takeaways

• Concerns over potential currency intervention by Japanese authorities have intensified
• Japanese regulators have repeatedly warned against sharp and one-sided exchange rate fluctuations
• Investors remain focused on the upcoming BoJ meeting
• USDJPY forecast for 16 January 2026: 159.70

Fundamental analysis

The USDJPY rate continues to decline and is approaching the key support level at 157.75. The yen received additional support after quotes nearly reached the 160.00 level. This development intensified market participants’ concerns regarding potential currency intervention by Japanese authorities. Regulators have repeatedly warned against sharp and one-sided movements in the exchange rate.

Despite the downward correction, the primary trend for the currency pair remains upward. This supports the bullish outlook for the USDJPY pair today. Investor focus remains on the upcoming BoJ monetary policy meeting, from which markets expect signals regarding the future trajectory of interest rate hikes.

According to current expectations, the regulator will maintain monetary policy parameters next week. At the same time, markets are pricing in the likelihood of the next interest rate hike around June.

Technical outlook

USDJPY quotes rebounded from the lower boundary of the Double Bottom reversal pattern, after which the pair continues to move within an ascending channel. At the same time, sellers managed to consolidate below the EMA-65, indicating a weakening of the short-term bullish momentum and the formation of a corrective move.

The USDJPY forecast for today suggests renewed growth with a target at the 159.70 level. The Stochastic Oscillator indicator further supports the bullish scenario. Its lines turned upwards from the support line and have not yet reached overbought territory, which preserves the potential for further growth.

Consolidation of USDJPY quotes above the 159.05 level will indicate a breakout above the upper boundary of the descending channel. This will signal the completion of the corrective phase and increase the probability of an upward move towards the specified target.

USDJPY overview

• Asset: USDJPY
• Timeframe: H1 (Intraday)
• Trend: Bullish
• Key resistance levels: 159.05 and 160.00
• Key support levels: 158.05 and 157.25

USDJPY trading scenarios for today

Main scenario (Buy Limit)

A corrective decline towards the 158.05 level could create favourable conditions for a long scenario as the USDJPY uptrend continues.

The risk-to-reward ratio exceeds 1:3. Potential profit upon reaching the target amounts to approximately 155 pips, while possible losses remain limited to 40 pips, making this scenario attractive from a risk management perspective.

• Buy Limit: 158.10
• Take Profit: 159.65
• Stop Loss: 157.70

Alternative scenario (Sell Stop)

Short positions are possible if the price breaks and consolidates below the 158.10 support level.

• Sell Stop: 157.65
• Take Profit: 157.00
• Stop Loss: 158.15

Risk factors

Risk factors for USDJPY growth include rising expectations of currency intervention by Japan and the possibility of more hawkish signals from the BoJ regarding monetary policy.

Summary

The USDJPY corrective decline is limited, and the continued uptrend supports a bullish outlook for the pair in the short term. USDJPY technical analysis indicates continued upside potential with a target at the 159.70 level.

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