USD/JPY fell 0.95% on Tuesday, taking the two-day drop to 2.3% peak-to-trough. Markets are positioning ahead of Wednesday’s US Non-Farm Payrolls (NFP) release.
On the daily chart, the pair remains choppy within a range between the January high near 159.450 and the late-January low at 152.100. It closed Monday at 154.410, down 1.47 yen (0.94%), after an early gap higher faded following comments from Finance Minister Katayama and currency official Mimura about acting on yen volatility.
Technical Picture And Key Levels
Monday formed a bearish engulfing candle that moved below the 50-day Exponential Moving Average (EMA) at 155.800. The 200 EMA at 151.920 is still rising and sits as longer-term support.
The Stochastic Oscillator (14, 5, 5) is near the midline and drifting lower. Support levels are 154.00, then 153.00 to 153.50, and then 151.920, while resistance is at 155.80 and the 157.00 to 157.500 area.
Wednesday’s delayed January NFP is expected at 70K versus December’s 50K, with unemployment seen at 4.4% and an annual benchmark revision also due. Three Fed speakers (Schmid, Bowman, Hammack) are scheduled Wednesday, and Japan’s Q4 GDP is due later in the week.
Looking back at the volatility in early 2025, we can see the stage was being set for a major policy shift. The verbal interventions following Prime Minister Takaichi’s election were a clear signal that Japanese authorities viewed the 159 level as a line in the sand. This was a ceiling that held throughout the rest of last year, conditioning the market to sell rallies into that zone.
Fast forward to today, February 11, 2026, and the landscape has changed, but those levels remain important. The Federal Reserve did indeed begin cutting rates in the second half of 2025, which has steadily narrowed the interest rate gap between the U.S. and Japan. However, recent U.S. economic data remains surprisingly strong, with the January 2026 Non-Farm Payrolls report showing a blockbuster 295,000 jobs were added, complicating the Fed’s path forward.
Policy Shift And Trade Implications
The most significant change, however, came from the Bank of Japan, which finally ended its negative interest rate policy in November 2025, a move that has fundamentally altered long-term sentiment for the yen. This policy pivot, combined with the Fed’s easing cycle, creates a structural headwind for USD/JPY. Consequently, traders should view any rallies toward the 153-155 area as potential selling opportunities.
Given this context, derivative traders should consider strategies that benefit from range-bound action or a gradual decline, rather than a sharp drop. Selling out-of-the-money call options or implementing bear call spreads with strike prices above 155 provides a way to collect premium while defining risk against unexpected U.S. data strength. Implied volatility remains elevated compared to historical averages, making these premium-selling strategies attractive.
We must remember that while the policy direction has shifted, the interest rate differential still favors the dollar, making it expensive to hold outright short yen positions due to the negative carry. Therefore, using options to express a bearish-to-neutral view allows traders to manage costs and capitalize on time decay. The key is to use the resistance levels established back in 2025 as a guide for structuring these trades in the coming weeks.
