USDJPY continues to rise: what stands behind the strong dollar and weak yen?

The USDJPY pair may continue its uptrend after a correction, with quotes currently located near the 158.10 level. Discover more in our analysis for 21 January 2026.

USDJPY forecast: key takeaways

• Investors await the BoJ interest rate decision
• The Fed may take steps to strengthen the USD
• USDJPY forecast for 21 January 2026: 159.30

Fundamental analysis

The forecast for 21 January 2026 appears optimistic for the USD, with the USDJPY pair trading near the 158.10 level after forming a corrective wave.

The main triggers influencing the USDJPY rate include:

• Expectations that the Fed may maintain a tight policy with rate hikes in the coming months, which supports USD strengthening against the Japanese yen
• Inflation, employment, and economic data from the US continue to determine the trajectory of the US currency, supporting current USDJPY levels
• BoJ interest rate decisions remain in focus. The Bank of Japan is expected to keep rates at low levels, which makes the Japanese yen less attractive to investors
• Japan has seen low inflation and no economic growth in recent reporting periods, which may act as a trigger for the yen’s weakness against the dollar

The USDJPY forecast for today takes into account that the USDJPY pair may continue its uptrend, supported by the Fed’s tight monetary policy and yen weakness. Further fluctuations remain possible within the current volatility, but the probability of a continued uptrend persists unless changes occur in BoJ policy or new economic data emerge.

Technical outlook

On the H4 chart, the USDJPY pair has formed a Hammer reversal pattern near the lower Bollinger Band and is trading around the 158.10 level. At this stage, it may continue the upward wave as the pattern signal plays out, with the upside target at 159.30.

At the same time, the USDJPY forecast also considers an alternative market scenario, where the price undergoes a correction towards the 157.40 level before growth.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday / Short-term)
• Trend: moderately bullish
• Key resistance levels: 158.50 and 159.50
• Key support levels: 157.40 and 157.00

USDJPY trading scenarios for today

Main scenario (Buy Limit)

A corrective decline to the 157.40–157.50 area may create conditions for opening long positions while maintaining the upward structure of USDJPY.

The current consolidation following the 8–13 January impulse represents a pause without a trend break. The narrowing of the Bollinger Bands indicates an accumulation phase ahead of the next move.

The risk-to-reward ratio exceeds 1:4, making the scenario attractive under controlled risk.

• Buy Limit: 157.45
• Take Profit: 159.30 / 159.50
• Stop Loss: 156.95

Alternative scenario (Sell Stop)

Selling becomes relevant if the price breaks and consolidates below 157.40, which will serve as the first signal of weakening upward momentum and a transition to a deeper correction.

• Sell Stop: 157.35
• Take Profit: 157.00
• Stop Loss: 157.85

Risk factors

Risk factors for the bullish USDJPY scenario include possible hawkish signals from the Bank of Japan and rising expectations of a rate hike as early as June. Stronger regulatory rhetoric or currency intervention in response to yen weakness may lead to a sharp strengthening of the JPY and a break in the current upward momentum.

Summary

The yen continues to lose ground in anticipation of interest rate decisions from the Fed and the BoJ. Technical analysis of USDJPY suggests growth towards the 159.30 level.

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