USDJPY in decline: what is behind the strengthening of the yen

The yen continues to gradually strengthen amid positive statistics from Japan, with USDJPY quotes testing the 153.30 level. Discover more in our analysis for 16 February 2026.

USDJPY forecast: key takeaways

• Japan’s Q4 GDP: previously at −0.7%, currently at 0.1%
• Japan’s industrial production: previously at −2.7%, currently at −0.1%
• Japan’s GDP deflator: previously at 3.5%, currently at 3.4%
• USDJPY forecast for 16 February 2026: 154.00 and 151.25

Fundamental analysis

The outlook for 16 February 2026 does not look optimistic for the USD, as the USDJPY pair has been forming a downward wave for the fourth consecutive day and may continue to decline after a correction. The pair is currently trading around 153.30.

GDP represents the total value of all goods and services produced in a country over a specific period, calculated based on final output excluding raw materials.

The previous GDP reading was negative at −0.7%, while the actual Q4 figure came in at 0.1%, with the forecast for 16 February 2026 expecting 0.4%. Although the actual value was 0.3% below expectations, it remained positive and supported the Japanese yen.

Japan’s GDP deflator, published by the Cabinet Office, reflects price dynamics for final goods and services. This indicator is an important measure of inflation trends and plays a significant role in forecasting future monetary policy. A stronger-than-expected reading is considered positive for the JPY, while a lower figure is seen as negative. The Q1 reading exceeded the 3.2% forecast and reached 3.4%. Although slightly below the previous value, in combination with other fundamental data, it may act as a trigger for further yen strengthening.

Japan’s industrial production stood at −0.1% in the latest report, compared to −2.7% previously. This can be viewed as an improvement, although the indicator remains in negative territory, which is not particularly supportive for the USDJPY rate.

Technical outlook

On the H4 chart, the USDJPY pair has formed a Hammer reversal pattern near the lower Bollinger Band and is trading around 153.30. At this stage, the pair may develop a corrective wave following the pattern signal, with a pullback target at 154.00.

At the same time, the USDJPY outlook also considers an alternative scenario, where the price declines towards 151.25 without testing the resistance level.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday)
• Trend: bearish
• Key resistance levels: 154.00 and 156.25
• Key support levels: 151.25 and 150.35

USDJPY trading scenarios for today

Main scenario (Sell Stop)

A breakout below 152.50 would create conditions for opening short positions. The risk-to-reward ratio exceeds 1:3. The potential profit upon reaching the take-profit level is about 115 pips, with possible losses capped at 30 pips.

• Sell Stop: 152.40
• Take Profit: 151.25
• Stop Loss: 152.70

Alternative scenario (Buy Stop)

A consolidation above 154.00 may trigger a bullish correction, and a breakout above 154.45 would open opportunities for long positions.

• Buy Stop: 154.50
• Take Profit: 156.25
• Stop Loss: 154.00

Risk factors

Risk factors for a decline in the USDJPY pair include buyers maintaining support at 152.25 and sellers’ failure to gain a foothold below 152.35, which may trigger a deeper upward correction. An additional risk to the bearish scenario is a potential easing of verbal interventions by Japanese authorities or a shift in Federal Reserve rhetoric that could support demand for the US dollar.

Summary

The yen continues to strengthen amid positive economic data from Japan. USDJPY technical analysis suggests a correction towards the 154.00 resistance level before a potential further decline.

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