Chart Alert: USD/JPY breaking 158.80 key resistance as US CPI looms with intervention risk

[Ben Graham]

Key takeaways

Yen weakness intensifies despite softer USD: USD/JPY has broken above the 158.80 key resistance and is trading near 158.9, marking a 1.5-year high as the yen continues to underperform even amid a broader US dollar pullback; verbal intervention has so far failed to halt the move.

Politics overtaking rates as the main driver: The traditional link between USD/JPY and US–Japan yield differentials has weakened since April 2025, with yen selling increasingly driven by the “Takaichi Trade” and snap-election risks that could reinforce pro-stimulus policies and constrain the BoJ’s tightening path.

Intervention risk rising as CPI looms: USD/JPY has entered the historical intervention-risk zone near 159.45 ahead of US CPI, with short-term momentum still bullish above 158.10, but a failure to hold this support could trigger a corrective pullback.

The Japanese yen has stood out as the FX market outlier over the past three trading sessions, remaining persistently weak despite a broader softening in the US dollar against other major currencies (see Fig. 1).

Intraday K-shaped performance in FX market

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Fig. 1: 1-day rolling performance of the US dollar against major currencies as of 13 Jan 2026 (Source: TradingView)

The yen has continued to fall on Tuesday, 13 January 2025, as the USD/JPY breached the 158.00 psychological level on Monday. In today’s Asia session, the Japanese currency extended its losses to hit a one-and-a-half-year low against the US dollar. The USD/JPY is now trading at an intraday level of 158.86 at the time of writing.

Verbal interventions from key authorities have so far failed to stem the ongoing yen weakness. During the late Monday US session, Japanese Finance Minister Katayama commented that she and US Treasury Secretary Bessent shared a “common concern” about the one-way weakening of the yen.

USD/JPY movements are moving away from rate differentials, with politics as the main driver

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Fig. 2: 2-year & 10-year US Treasury/JGB yield spreads major trends with USD/JPY as of 13 Jan 2026 (Source: TradingView)

In the past five years, there has been a strong direct correlation between the movement of the USD/JPY and the US-Japan sovereign bond yield (rate) differentials.

However, this relationship has started to break down. Since April 2025, the narrowing of the 10-year and 2-year US Treasury/JGB yield spread has failed to spark a downward drift of the USD/JPY (see Fig. 2).

The primary reason that may explained the recent yen weakness is likely related to the “Takaichi Trade” narrative. On Sunday, local Japanese media reported that Japanese Prime Minister Takaichi had the intention to dissolve the parliament's lower house and called for a snap election soon, either on February 8 or February 15.

A snap election would likely aim to capitalize on high approval ratings of about 70% for Takaichi and could strengthen the Liberal Democratic Party’s grip on power in the more powerful lower house in Japan’s parliament. Hence, if successful as it is intended, Takaichi can have a firmer mandate to pursue pro-stimulus policies that may hinder the Bank of Japan (BoJ)’s current gradual interest rate hike policy.

USD/JPY is trading inside the intervention-risk zone ahead of today’s US CPI

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Fig. 3: USD/JPY medium-term & major trends as of 13 Jan 2026 (Source: TradingView)

The BoJ, under the instruction of the Ministry of Finance, last intervened in the FX market to sell down the US dollar on 12 July 2024 when the USD/JPY hit an intraday high of 159.45.

The USD/JPY is now trading close to the 159.45 level, which is breaking above the upper limit of a key medium-term pivotal resistance of 158.80 (see Fig. 3).

Let’s now highlight what the key levels to watch on the USD/JPY are based on a technical analysis perspective, as we wait for the release of the US CPI data for December later today, which can be a short-term key driver to spark two-way movement on the USD/JPY

Short-term momentum supports further USD/JPY strength

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Fig. 4: USD/JPY minor trend as of 13 Jan 2026 (Source: TradingView)

The USD/JPY has staged a bullish breakout with an hourly close above the 158.80 key medium-term resistance, without any bearish divergence condition seen on its hourly RSI momentum indicator at its overbought region (see Fig. 4).

Watch the 158.10 key short-term pivotal support on the USD/JPY to maintain the intraday bullish momentum for the next intermediate resistances to come in at 159.45/159.75 and 160.24/160.35 (also a Fibonacci extension).

On the flipside, a break and an hourly close below 158.10 invalidates the bullish bias to open up scope for a minor corrective decline to expose the next intermediate supports at 157.50, 157.28/157.00, and even 156.30 (close to the 20-day moving average)

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