A highly volatile yearly opening month is now concluding, leaving some marks on market participation. After a dull trading period throughout the end of 2025, January brought back heavy movement in currency markets. Japan’s Ministry of Finance conducted a rate check last week, leading to a 6,000 pip drop in USD/JPY, which is now recovering sharply.
The Japanese yen had been subject to a rout unseen since late 2023, with participants increasingly fearful of unstable fiscal policies from the newly elected Prime Minister Sanae Takaichi.
After an initial move up in USD/JPY, a more hawkish Bank of Japan stance in end-2025 helped to stabilize currency movement.
Nevertheless, Takaichi’s government announced snap elections, which have the potential to further facilitate fiscal dovishness and led to a decisive move higher in the pair beyond 2025 records to 159.454.
Currency interventions in Japan are among the favorite (yet rarely used) tools of the Ministry of Finance (MOF) to address too swift currency movements.1
After an unfruitful verbal intervention, Japan’s MOF decided to opt for a rate check, traditionally the final step before actual FX market operations.
Even after the 6,000 pip drop, traders haven’t found enough conviction to maintain a consistent lower path, leading to the past end-of-week rally in USD/JPY, back towards 155.00.
Now testing its 50-period moving average at 155.10, participants are actively monitoring whether bulls or bears will retake control of the price action around the indicator.
With the announcement on Friday that Kevin Warsh was nominated to be the next Federal Reserve chairman, movement in the pair isn’t exclusively related to yen weakness but also to US dollar dynamics heading into February trading.
USD/JPY 4H chart, February 2, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- 155.00 to 155.50 major resistance, higher timeframe pivot (immediate test)
- 156.00 key resistance
- Mini-resistance 157.00 to 157.30
- 157.90 to 158.90 2025 major resistance
Support levels
- 154.00 momentum pivot
- Key support from 152.80 to 153.00
- 155.822 January lows
- Major support 151.50 to 152.00
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high risk. Losses may exceed deposits.
