The Japanese Yen exchange rate trend has reached a turning point, with the market fiercely contesting the 150 level.

The recent movement of the Japanese yen exchange rate has sparked widespread market discussion. On February 11, USD/JPY broke through the 153 level amid positive political stability and expectations of a central bank rate hike, attracting global investor attention. Behind this rise are both domestic political factors in Japan and market hopes for a shift in the Bank of Japan’s policy.

Rate hike expectations and political optimism jointly strengthen the yen

The results of Japan’s general election sent a positive signal. The ruling coalition, led by Prime Minister Sanae Takashi, achieved an overwhelming victory, significantly easing concerns about fiscal prospects. Takashi stated that they would not issue deficit bonds to finance consumption tax cuts, which effectively stabilized market sentiment and reduced expectations of excessive fiscal expansion. Meanwhile, Japan’s Finance Minister, Shigeyuki Kato, warned that the government is prepared to act against abnormal currency fluctuations, further providing policy support for the yen.

Expectations of a rate hike by the central bank have also fueled the yen’s rally. U.S. banks have moved up their expectations for the Bank of Japan’s rate hike from June to April, with a projected increase of 25 basis points. Rising rate hike expectations typically attract foreign capital into high-yield assets, leading to currency appreciation. This effect is especially pronounced in the foreign exchange market.

Diverging institutional forecasts: bears vs. bulls

Market participants have shown significant divergence in their outlooks for the yen’s future. This split essentially reflects differing judgments about Japan’s economic prospects, the central bank’s resolve, and market sentiment.

Mizuho Securities adopts a more conservative stance. The firm believes that the long-term depreciation trend of the yen is difficult to reverse, expecting USD/JPY to move within the 160–165 range, implying further weakening of the yen. Nomura Securities warns of the risk of a “Takashi trade” restart — meaning the market might sell the yen again due to new government policy expectations. Once the exchange rate approaches the 160 level, the likelihood of intervention by Japan’s Ministry of Finance will rise sharply, and policy intervention could become a new constraint on the currency.

Deutsche Bank takes a more neutral position, having closed its previous short yen positions. The bank believes that more favorable policies may be introduced, and the previously promised consumption tax cuts could be delayed, both of which would support the yen.

150 and 160 are key psychological levels; bulls are optimistic about breaking through

Contrary to the pessimistic views, some institutions are more confident in the yen’s upside potential. They believe that the April rate hike is a certainty, and based on this, the yen could break through the 150 level and continue upward. The logic behind this view is: a rate hike increases yields, attracting more capital inflows and pushing the yen higher.

The 150 and 160 levels have become focal points in market debates. 150 is a psychological barrier for yen appreciation; breaking through it could open the door to further gains. 160 is considered a critical point for potential intervention by Japan’s Ministry of Finance, which could cap the yen’s rise. Investors should closely monitor policy signals and technical indicators to prepare for possible sharp fluctuations in the yen exchange rate.