The foreign exchange market on February 26th, 2026 witnessed strong fluctuations of the Yen.
The USD/JPY exchange rate pair is currently trading at 156.05, down about 0.39 points (equivalent to 0.25%) compared to the previous session. This shows that the Yen is making slight recovery efforts, after Bank of Japan (BOJ) Governor Kazuo Ueda left open the possibility of further tightening monetary policy if wage growth and inflation are maintained stably.
However, the recovery momentum of the Yen is facing a major "barrier" from the government of Prime Minister Sanae Takaichi.
Ms. Takaichi's nomination of two moderate figures (dovish) to the BOJ Board of Directors sent a clear message of dissatisfaction with the rapid interest rate hike.
Disagreements between the monetary policy regulator and the government caused the Yen to bear significant downward pressure in the previous trading session, as investors worried about the threatened independence of the BOJ.
Analyzing more deeply about cash flow, the USD/JPY exchange rate (the Yen exchanged for 1 US dollar) is reflecting extreme caution. Meanwhile, the JPY/USD exchange rate (the value of the Yen in dollars) is still in a weaker trend compared to the same period last year because the interest rate difference between the US and Japan has not really narrowed.
Analysts from ING believe that, instead of April, the actual possibility of interest rate hikes may have to be postponed to June after the figures on the Spring Wage Negotiations are officially confirmed.
The consequence of this policy warfare is that the Yen has fallen into an unpredictable state. On the one hand, high food inflation due to the weak Yen is driving the demand for interest rate hikes to protect people's purchasing power.
On the other hand, government concerns about the impact on mortgage interest rates and capital spending are hindering the appreciation of the domestic currency.
The diễn biến of the USD/JPY exchange rate in the short term will depend greatly on whether new members of the BOJ maintain their academic views or will be convinced by the volatile market reality.
Looking at the technical chart, the Yen is still in a fairly wide 52-week range from 139.88 to 159.46.
With the current price of 156.05, the Yen is in a neutral zone but very sensitive to statements from officials. Investors need to pay special attention to the threshold of 155.71, the lowest level of the day, because if this zone is broken, the Yen may activate technical buy orders, pushing the USD/JPY exchange rate deeper back to the old support zone.
