Exchange Rates UK Research's latest May 2026 survey of major investment banks shows the USD/JPY exchange rate is expected to gradually decline from current levels near 159.00 towards the 145–150 region through 2027, signalling expectations for a broader Japanese yen recovery after several years of sustained weakness. The latest poll.
After suspected intervention activity from Japanese authorities created havoc with traditional market relationships the prior week, USD/JPY reverted to trading primarily off moves in the front-end of the US Treasury curve over the past five trading days. As shown in the rolling correlation matrix below, short-dated US yields once again emerged as the standout driver of the pair, providing a far better read on what matters and what does not heading into the new week.
Rising demand for safe-haven assets provided support to the American currency.
USDJPY managed to hit the target of 157.50-70 and above. As we see from the chart, the market still has the chance for a further advance as this zone could control the market movement between support 155.00 and .resistance 160.20-60 Above 160.60 more advance is likely with resistance at 161.95.
USD/JPY Price Forecast: Extends winning streak and stabilizes above 20-day EMA
USD/JPY is once again approaching territory that could force Japanese authorities into difficult decisions. The pair surged through 158 on Friday as broad Dollar strength combined with another sharp rise in US Treasury yields.
Looking at the 4-hour chart, the pair spiked above the 50% Fib retracement level of the downward move from the 160.72 swing high to the 155.03 low. However, the bears remained active near the 100 simple moving average (red, 4-hour).
USD/JPY Price Forecast: Reclaims 158.00 as bulls target intervention area
The American currency is moving higher, supported by the encouraging Retail Sales data.
USD/JPY outlook remains firmly bullish as rising global bond yields and inflation data reshape currency dynamics. Razan Hilal, Market Analyst at FOREX.com, explains how diverging central bank policies, surging U.S. and Japanese yields, and long-term technical structures are driving the pair toward key resistance levels.
USD/JPY is once again trading like a rates differential story, particularly at the front-end of the curve. The relationship reasserted itself aggressively following the latest hot US inflation data, helping to explain why the pair is once again pressing up against levels where suspected intervention from Japan's Ministry of Finance took place in recent weeks.
The American currency is moving higher as traders focus on inflation risks.