Last Updated: January 22, 2026 | Tapbit FX & Macro Desk
The Japanese yen continues to trade near multi-decade lows, with USD/JPY hovering around 158.31 (Jan 22 close) as markets position for the Bank of Japan’s January 23, 2026 policy decision. Consensus expects rates to remain unchanged at 0.75%, accompanied by dovish guidance that reinforces the “higher for longer” status quo in Japan while the Fed remains data-dependent. Prime Minister Sanae Takaichi’s fiscal expansion rhetoric — tied to a possible snap election in spring 2026 — adds further downward pressure on the yen by signaling larger deficits and sustained easy policy. This guide covers the key drivers, technical levels, intervention risk, and how Tapbit traders can position in USD/JPY spot and futures amid the ongoing weakness.
USD/JPY Market Snapshot – January 22, 2026
| Pair / Metric | Current Level | 24h Change | 1-Week Range | Key Note |
|---|---|---|---|---|
| USD/JPY | 158.31 | +0.18% | 157.80 – 158.65 | Near 1990 highs |
| BOJ Policy Rate | 0.75% | — | — | Expected hold Jan 23 |
| 10y JGB Yield | ~1.18% | Flat to +1 bp | — | Still below inflation target |
| US 10y Treasury Yield | ~4.38% | –2 bp | — | Yield differential supportive of yen weakness |
| Intervention Threshold (rumored) | ~160.00–162.00 | — | — | No confirmed action yet |
Primary Drivers Weighing on the Yen Ahead of BOJ
1. Expected BOJ Rate Hold + Dovish Guidance
Markets price in a ~95% probability of no change at 0.75% on January 23, with Governor Ueda likely reiterating that further hikes are conditional on sustained wage growth and inflation above target. This contrasts sharply with the Fed’s still-restrictive stance, keeping the policy differential wide and supporting USD/JPY upside pressure.
2. Takaichi’s Fiscal Expansion & Snap Election Risk
Prime Minister Sanae Takaichi’s public comments favoring larger supplementary budgets and stimulus measures — potentially tied to a spring 2026 snap election — are being interpreted as a commitment to prolonged easy fiscal policy. Larger deficits → more JGB issuance → downward pressure on yields → weaker yen.
3. Persistent Yield Differential & Carry Trade Flows
Despite occasional verbal intervention threats, the 10y JGB – US Treasury spread remains deeply negative (~ –3.2%), fueling carry trades that sell yen to buy higher-yielding assets. This structural flow continues to dominate short-term price action.
Technical Levels & Intervention Risk Watch
USD/JPY – Current ~158.31
- Immediate Resistance: 158.65–159.00 (recent high cluster)
- Next Major Resistance: 160.00–160.50 (psychological + 1990 highs)
- Critical Support: 157.00–157.50 (50-day EMA + prior swing low)
- Intervention Danger Zone: 160.00–162.00 (MoF / BOJ rumored threshold)
- RSI (daily): ~68 → overbought but momentum still intact
Conclusion
The Japanese yen remains under sustained pressure near 158.31 ahead of the Bank of Japan’s January 23, 2026 policy decision, with rates widely expected to stay at 0.75% amid dovish guidance. Prime Minister Takaichi’s fiscal expansion rhetoric and potential snap election risks further weaken the yen by signaling larger deficits and prolonged easy policy. While verbal intervention threats persist around 160–162, the structural yield differential and carry-trade flows continue to dominate.
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Disclaimer: This article is for informational purposes only and does not constitute investment or financial advice. Forex and cryptocurrency markets are highly volatile and subject to central bank decisions, geopolitical events and macroeconomic shifts. Always conduct your own research (DYOR) and never invest more than you can afford to lose completely.
