Tokyo, January 22, 2026 — The U.S. dollar held steady against the Japanese yen at 157.93 on Monday, as investors flocked to safer assets amid escalating geopolitical tensions and renewed trade concerns. The yen attempted to strengthen during volatile trading, reflecting a broader market appetite for stability.
Global Uncertainty Weighs on Currency Markets
Heightened risks from trade disputes and political developments are driving demand for defensive currencies.
- U.S. President Trump has threatened new tariffs against eight European nations over disagreements regarding Greenland.
- The Bank of Japan (BOJ) is expected to maintain its current monetary policy at its upcoming meeting, with June seen as a potential timeframe for a rate hike.
- Rumors of early elections in Japan are circulating, potentially leading to a temporary suspension of the 8% food sales tax.
- Technical analysis suggests a short-term bearish outlook for USD/JPY, with potential declines to 156.81.
The market’s cautious mood was fueled by a surprising move from U.S. President Donald Trump, who threatened new tariffs against eight European countries in response to ongoing disputes over Greenland. This announcement triggered immediate backlash from European leaders and injected further uncertainty into global trade relations.
What factors are currently influencing the USD/JPY exchange rate? The USD/JPY exchange rate is currently being influenced by a combination of geopolitical risks, anticipated monetary policy decisions from the Bank of Japan, and potential political shifts within Japan itself.
Domestically, all eyes are on the upcoming Bank of Japan (BOJ) meeting. The consensus expectation is that the central bank will hold its current policy stance. However, investors are keenly watching for any signals regarding a potential rate hike, with June being widely discussed as a possible timeline.
Adding another layer of complexity, rumors are swirling about the possibility of early elections in Japan. Prime Minister Sanae Takaichi could announce a snap election next month, aiming to solidify his position and push for a more flexible budget policy. As part of his campaign platform, Takaichi is reportedly considering a temporary suspension of the 8% food sales tax to alleviate the financial strain on consumers facing rising food prices.
Technical Outlook: USD/JPY
On the H4 chart, USD/JPY is currently consolidating around the 158.10 level, having recently broken down from this range. A potential decline to 156.81 is in focus, with a possible rebound to 158.10 anticipated after reaching that level. The MACD indicator reinforces this bearish perspective, as its signal line remains below the zero mark and is trending downward.
Looking at the H1 chart, a downward wave towards 157.36 is forming, with a potential correction to 158.10 before another move lower towards 156.81. The Stochastic oscillator confirms this scenario, with the signal line descending towards the 20 level.
USD/JPY remains in a period of consolidation, reacting to both domestic and international uncertainties. Investors are closely monitoring the BOJ meeting and the potential for political developments within Japan. From a technical standpoint, the pair is exhibiting signs of short-term bearishness, suggesting further declines are possible in the near term.
