Yen Gains On Japanese Authorities. Forecast as of 19.01.2026 | LiteFinance
Sometimes, the government and the Bank of Japan’s efforts are not enough to reverse the USD/JPY pair’s uptrend. Today, Donald Trump seems to be the only one who can do this, and he actually did. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The yen was on the verge of currency intervention.
- The trade war will help USDJPY bears.
- Risks of consolidation for the pair are increasing.
- Long trades can be considered if USD/JPY quotes settle above 158.4.
Weekly Fundamental Forecast for Yen
Money and power are enough to force anyone to their knees, including USD/JPY bulls. All the more so if Donald Trump comes up with something out of the blue, demanding Greenland and thus undermining confidence in the US dollar. The 10% tariffs against the UK and some EU countries came as an unexpected shock. As a result, the USD/JPY pair began this trading week with a gap. Meanwhile, the yen’s status as a safe-haven asset remains unchanged.
Sanae Takaichi’s plan to dissolve the lower house of parliament and call snap elections in February seems like a rational move given the Liberal Democratic Party leader’s rising approval ratings. However, the yen’s weakness could ruin everything. The associated increase in import prices and inflation will ultimately erode consumer spending and backfire on the party’s credibility.
TOPIX, Yen Performance, and Japanese Government Bond Yield
Source: Bloomberg.
Against this backdrop, the Takachi trade, which involves buying stocks and selling bonds and yen, has faced opposition from the government. Finance Minister Satsuki Katayama made the strongest verbal intervention since the previous one on Forex, while Kazuo Ueda continues to stress that the normalization cycle should be continued if the Bank of Japan’s criteria are met.
One of these criteria is inflation, which has exceeded the 2% target for four years. During this time, the BoJ has implemented an extremely cautious monetary policy. More than 60% of Bloomberg experts believe that the central bank is lagging behind the curve, raising rates too slowly. Nevertheless, even at this pace of overnight rate growth, the yen remains significantly undervalued against the US dollar based on bond yield differentials.
USD/JPY Rate and Fed–BOJ Rate Differential
Source: Bloomberg.
Economists surveyed by Bloomberg expect the BoJ to continue moving at a very slow pace. The majority of respondents (68%) foresee one rate hike every six months. Such a pace could lead to a renewed rally in the USD/JPY pair. However, this would not be the case if it were not for interventions, the government, and Donald Trump.
The US president’s agenda includes weakening the dollar. He remembers well the greenback’s reaction to tariffs on Liberation Day, so the announcement of new tariffs against certain European countries could be part of a devaluation strategy. The return of the Sell America strategy to the markets could hit USDJPY quotes harder than interventions and the government’s attempt to stabilize the yen.
Weekly USDJPY Trading Plan
Thus, although the Takaichi trade is a bullish factor for the USD/JPY pair, the risks of an intervention in the Forex market and the trade war between the US and Europe are viewed as bearish factors. As a result, the pair may be stuck in a consolidation phase. In this case, the level of 158.4 becomes a line in the sand. Should the price exceed this threshold, traders will likely start buying the dollar against the yen.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of USDJPY in real time mode
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