Japanese Yen Slides Closer to 155.00 Against USD Amid Fiscal Concerns and Market Uncertainty
February 24, 2026 | FXStreet – By Haresh Menghani
During the Asian trading session on Tuesday, the Japanese Yen (JPY) weakened against the US Dollar (USD), with the USD/JPY currency pair edging higher and approaching the psychologically significant level of 155.00. The pair is up nearly 0.15% on the day, building on a bounce from 154.00 observed the previous session. Despite the upward movement, further gains seem limited in the face of mixed economic signals and cautious investor sentiment.
Japan’s Fiscal Concerns Weigh on Yen
Market participants remain concerned about Japan’s fiscal health as Prime Minister Sanae Takaichi is expected to announce additional stimulus measures to support a sluggish economy. These concerns are compounded by the country’s recent weak GDP growth figures for the fourth quarter, which have dampened expectations for an imminent rate hike by the Bank of Japan (BoJ). This dovish outlook from the BoJ has undermined the Japanese Yen, thereby supporting the USD/JPY pair’s upward momentum.
BoJ Policy and Intervention Risks
The BoJ’s reluctance to tighten monetary policy sharply contrasts with expectations in other major economies, particularly the United States, where the Federal Reserve’s (Fed) policy signals remain dovish but less so compared to Japan’s ultra-loose stance. Reports have also emerged that US Treasury Secretary Scott Bessent personally coordinated a "rate check" during January, when the Yen was rapidly depreciating toward 158 against the USD. This intervention aimed to curb excessive Yen weakness amidst political uncertainties related to Japan’s impending lower house election.
Such developments keep the possibility of coordinated intervention alive, which could limit the Japanese Yen’s further decline and cap large gains in the USD/JPY rate.
US Dollar Dynamics and Global Trade Concerns
A modestly stronger US Dollar has contributed to the USD/JPY’s advance. However, broad USD appreciation faces headwinds amid growing worries about the economic fallout from newly imposed global tariffs of 15% announced by US President Donald Trump. Additionally, speculative bets on further rate cuts by the Federal Reserve are expected to temper the greenback’s strength, which could restrain the USD/JPY pair from pushing much beyond current levels.
Looking Ahead: Key Economic Data and FOMC Speeches
Traders are closely monitoring the upcoming US economic calendar, which features important indicators such as the Conference Board’s Consumer Confidence Index and the Richmond Manufacturing Index. These releases, combined with speeches from influential Federal Open Market Committee (FOMC) members, may provide fresh impetus to the US Dollar and, by extension, the USD/JPY currency pair.
Japanese Yen: Key Drivers Explained
What influences the Japanese Yen?
The JPY’s value is primarily influenced by the performance of the Japanese economy, Bank of Japan policy decisions, the yield differential between Japanese and US bonds, and broader risk sentiment in global markets.
How does the Bank of Japan affect the Yen?
As part of its mandate, the BoJ sometimes intervenes directly in currency markets. Historically, its ultra-loose monetary policy between 2013 and 2024 led to Yen depreciation due to a growing policy divide with other central banks. Recently, the BoJ’s gradual exit from this ultra-loose stance has provided some support to the Yen, although intervention fears persist when volatility spikes.
Yield differentials and risk sentiment
The Fed’s rate hikes in contrast to the BoJ’s prolonged low rates expanded the yield gap between US and Japanese government bonds, favoring the US Dollar. As the BoJ adopts a more normalized policy, this differential is narrowing. Additionally, the Yen often benefits from safe-haven demand during periods of market stress, strengthening against riskier currencies.
Conclusion
The Japanese Yen continues to face downward pressure amid Japan’s fiscal challenges and cautious monetary policy outlook from the BoJ. Meanwhile, the US Dollar’s advance is limited by trade tensions and expectations of a dovish Fed. Intervention risks and market caution are likely to cap the USD/JPY pair near current levels, keeping the Yen’s slide toward 155.00 in check.
Investors will await upcoming US economic data and Fed commentary for clues on the next moves in this key currency pair.
About the author:
Haresh Menghani is a seasoned financial analyst with over 10 years of experience in global markets, specializing in forex and macroeconomic trends.
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This article is for informational purposes only and should not be construed as investment advice. Market conditions can change rapidly, and investors should conduct their own research before making financial decisions.