Created on February 03, 2026

The US dollar continues to see a lot of noise, as traders have recently tried to push the Federal Reserve into perceived rate cuts coming quickly. This is something the trading community has been wrong about for some side.

USD/JPY

The US dollar has risen slightly against the Japanese yen, gaining about 0.5% during the trading session on Monday as we are now threatening the 50-day EMA.

Quite frankly, I think the bulk of traders out there got caught on the wrong side of the Federal Reserve guestimate of the month. We’ve seen this multiple times previously where the market starts getting hyper-excited about the idea of interest rate cuts. While we do see them recently, the reality is they’re not going to be as quick as people think.

Furthermore, it’s not as if the Federal Reserve balance sheet is going to suddenly explode. The nominee, Kevin Warsh, is somebody who’s been a little bit hawkish over the longer term, so he probably brings a little bit of uncertainty to traders instead of the prayers of loose monetary policy that we’ve seen over the last couple of years that the market’s consistently gotten wrong.

Bank of Japan Constraints

On the other side of this equation, we have the Bank of Japan, which really can’t raise rates much, if at all, because they have too much debt. So, with all of that being said, I do think we eventually creep our way back towards the 158-yen level again, collecting swap along the way.

I like the idea of buying dips; I don’t necessarily want to chase this trade. But you’ve been watching me for months be bullish on this pair despite the fact that we saw some type of intervention. The reality is, it looks like we’re going to try to make our way back up to this battlefield again.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.