Japan’s rates and the US trade war: what will be the trigger for USDJPY

The USD continues to strengthen against the yen, with the USDJPY rate currently standing at 156.10. Find out more in our analysis for 26 February 2026.

USDJPY forecast: key takeaways

• The Bank of Japan and the government are pulling the yen in opposite directions
• The US president continues his tariff battles
• USDJPY forecast for 26 February 2026: 157.45

Fundamental analysis

The outlook for 26 February 2026 appears optimistic for the USD. After a pullback, the USDJPY pair is forming a new upward wave and may continue to rise, with quotes currently trading around 156.10.

Key triggers influencing USDJPY:

• The Bank of Japan and the government are pulling the yen in opposite directions

BoJ Governor Kazuo Ueda stated that if economic forecasts materialise, rate hikes will continue. He emphasised that data will be carefully assessed at the March and April meetings, sending a hawkish signal that should support the yen.

However, Prime Minister Sanae Takaichi expressed concern about further rate hikes, citing potential negative effects on the economy. During last week’s meeting with Ueda, her stance appeared noticeably firmer than in November.

• The US president continues tariff battles, adding to uncertainty and putting pressure on the dollar, though not critically. The market has largely priced in the trade war, and against this backdrop, the USD continues to strengthen against the yen
• US inflation may remain elevated, increasing the likelihood of a reassessment of the Fed’s rate outlook in the near term
• The USDJPY pair is awaiting a trigger for either growth or decline, which may come from Tokyo and US inflation data due on 27 February 2026

Despite economic data and pressure from both the BoJ and the Fed, the USD continues to strengthen against the yen, and in the near term, quotes may reach the 2024 highs.

Technical outlook

On the H4 chart, the USDJPY pair formed a Shooting Star reversal pattern near the upper Bollinger Band and is currently trading around 155.90. At this stage, the pair may continue its corrective wave in line with the pattern signal, with the downside target at 155.35.

At the same time, today’s USDJPY forecast also considers an alternative scenario in which quotes rise towards 157.45 without testing the support level.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday)
• Trend: bullish
• Key resistance levels: 157.45 and 158.70
• Key support levels: 155.35 and 154.15

USDJPY trading scenarios for today

Main scenario (Buy Stop)

A breakout above 157.45 may create conditions for opening long positions. The risk-to-reward ratio exceeds 1:4, with potential upside of about 135 pips and a risk of around 30 pips.

• Take Profit: 158.70
• Stop Loss: 157.15

Alternative scenario (Sell Stop)

A bearish scenario will unfold if the price breaks and consolidates below the 155.35 support level, opening the door for further corrective decline.

• Take Profit: 154.15
• Stop Loss: 155.55

Risk factors

A key risk to the bullish scenario would be renewed demand for the yen if rate expectations shift and confidence in further BoJ tightening increases. Additional pressure on the pair could come from lower expectations that the Federal Reserve will maintain high interest rates, leading to a correction in the US dollar.

Summary

The yen continues to lose ground against the USD, with disagreements between the BoJ and the government adding to uncertainty. Technical analysis suggests the USDJPY pair may rise towards 157.45 after a correction phase.

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