JPY Under Pressure Amid Fiscal Concerns as USD/JPY Tests 156.00 The Japanese Yen (JPY) continues its downward slide for the fourth straight day, hitting a nearly four-week low as the European session opens on Wednesday. Despite a resilient services sector—with the Jibun Bank Services PMI rising to 53.7—the Yen remains weighed down by political and fiscal anxieties. Prime Minister Sanae Takaichi’s aggressive tax-cut pledges and expansionary spending plans ahead of the February 8 snap election have fueled concerns over Japan’s public debt, pushing USD/JPY toward the mid-156.00s.
However, the upside for the pair may be limited. Investors remain wary of potential coordinated intervention from Japanese and US authorities following recent rate checks by the New York Fed. Additionally, the Bank of Japan’s (BoJ) hawkish tilt—signaling readiness for further rate hikes—provides a floor for the Yen. On the other side of the pair, the US Dollar is struggling for momentum; even with Kevin Warsh’s nomination and the end of the government shutdown, expectations of two more Fed rate cuts in 2026 are keeping USD buyers on the sidelines ahead of today’s ISM Services PMI and ADP employment data.
USD/JPY Technical Outlook: Bulls Eye Confluence Resistance at 156.51 Wednesday’s climb above 156.00 follows an overnight breach of the 50% Fibonacci retracement level (derived from the 159.13–152.06 decline), further empowering USD/JPY bulls. The 14-period RSI stands at 66.9, signaling a robust but maturing trend that remains shy of overbought territory.
However, indicators suggest a need for caution. The MACD histogram, while positive, is beginning to contract, hinting at a potential loss of momentum. Immediate upside faces a significant hurdle at the 156.51 confluence zone—where the 4-hour 100-period SMA meets the 61.8% Fibonacci level. A clean break above this barrier is essential to confirm a sustained bullish reversal. If successful, the pair may target the 78.6% retracement at 157.62; otherwise, the recovery remains susceptible to a pullback
