USD/JPY Forecast 2024 – Yen Outlook Against the US Dollar in 2024

The USD/JPY currency pair represents the value of the Japanese yen (JPY) relative to the U.S. dollar (USD). With the world’s third largest economy, Japan’s economic health and monetary policies significantly influence the value of the yen. As we head into 2024, forecasting the USD/JPY exchange rate requires analyzing factors driving the currencies.

This comprehensive guide provides an in-depth USD/JPY forecast for 2024. We’ll explore economic projections, central bank policies, geopolitics, technical analysis and expert projections to predict where the yen is headed against the dollar next year.



  • Overview of USD/JPY and key drivers
  • Recap of USD/JPY in 2022-2023
  • Forecasting approach

Fundamental Analysis

  • Japanese economic projections
    • GDP growth
    • Inflation
    • Employment
    • Trade balance
  • U.S. economic projections
    • GDP growth
    • Inflation
    • Employment
    • Trade balance
  • BOJ policy analysis
    • Interest rates
    • QQE program
    • Yield curve control
  • Fed policy analysis
    • Interest rates
    • Balance sheet reduction
    • Forward guidance
  • Geopolitical factors
    • China relations
    • Energy security

Technical Analysis

  • Review of historical USD/JPY price action
  • Key support and resistance levels
  • Trend lines and chart patterns
  • Moving averages and technical indicators
  • Ichimoku cloud analysis

Expert Projections

  • Major bank forecasts
  • Analyst price targets
  • Future positioning and sentiment

Trading Strategies

  • Range trading strategies
  • Trend trading strategies
  • Hedging and risk management

USD/JPY Recap 2022-2023

The USD/JPY began 2022 trading near 115 and embarked on a strong uptrend through the first half of the year, driven higher by diverging monetary policies between the Federal Reserve and Bank of Japan. The pair reached 24-year highs above 139 in September 2022 before pulling back sharply. In 2023 so far, the USD/JPY has traded in a range between 127-134.

Fundamental Analysis

Fundamental economic conditions and central bank policies are key drivers of long term exchange rate movements. Analyzing projections for Japan and the U.S. as well as comparing their respective central bank policies provides insights into the potential direction of the USD/JPY in 2024.

Japanese Economic Projections

As the third largest economy globally, Japan’s economic health significantly impacts the valuation of the Japanese yen. Let’s look at some of the major Japanese economic indicators and forecasts for 2024.

GDP Growth
  • 2022 GDP contracted 0.2%
  • 2023 projected growth 1.8%
  • 2024 forecast around 1.5%

Japan’s economy shrank slightly in 2022 and is expected to see modest GDP growth around 1.5-2% annually over the next couple years. This pace remains below Japan’s pre-pandemic growth trend. Slow growth limits upside for the yen.

  • 2022 inflation hit 2.9%
  • 2023 forecast around 2%
  • 2024 projected to moderate towards 1% target

While inflation rose in Japan due to imported costs, it remains relatively contained compared to the U.S. and other major economies. Muted inflation limits pressure for significant BOJ tightening.

  • Unemployment rate was 2.5% at end of 2022
  • Tight labor market expected to persist

With unemployment near 30-year lows, Japan’s job market remains tight. This supports consumer spending and growth, though may raise inflation pressures. Could encourage marginal BOJ tightening.

Trade Balance
  • 2022 trade deficit of $122 billion
  • Export growth constrained by global slowdown
  • Imports inflated by energy costs

Japan’s first annual trade deficit in many years reflects supply chain strains, the weak yen, and high imported energy costs. The wide deficit weighs on the JPY.

U.S. Economic Projections

As Japan’s major trading partner, the trajectory of the U.S. economy significantly sways the USD/JPY exchange rate.

GDP Growth
  • 2022 growth was 1.8%
  • 2023 projected at 1%
  • 2024 forecast around 1.5%

The U.S. economy is expected to grow below its pre-pandemic trend of 2-3% over the next couple years as the Fed tightens policy to combat inflation. Slower growth limits upside for the dollar.

  • 2022 inflation hit 8.6%
  • 2023 forecast around 3.5%
  • 2024 projected to fall toward 2% target

Inflation surged in the U.S. but is expected to moderate over the next couple years as supply chains improve, spending slows, and the Fed raises rates. Falling inflation reduces pressure for aggressive Fed hikes.

  • Unemployment rate was 3.5% at end of 2022
  • Job market expected to soften in 2023-2024

The U.S. job market remains tight but is projected to weaken as the Fed cools demand to lower inflation. Some softening in the labor market will reduce pressure on the Fed to hike rates.

Trade Balance
  • 2022 trade deficit expanded to over $1 trillion
  • Weaker global growth to constrain export growth

America’s massive trade imbalance reflects sustained demand for imported consumer goods. This widens the current account deficit which weighs on the dollar.

BOJ Policy Analysis

The Bank of Japan’s accommodative monetary policies contrast sharply with the hawkish stance of the Fed, creating divergence that impacts the yen.

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Interest Rates
  • BOJ has kept short term rate at -0.1% since 2016
  • Policy rate expected to hold into 2024

Despite rising global rates, the BOJ has reiterated its commitment to ultra-low interest rates to support Japan’s fragile economy. Very dovish policy stance weights on the yen.

QQE Program
  • BOJ continues large scale asset purchases
  • Balance sheet now over 100% of GDP
  • Unlikely to taper asset purchases in 2023-2024

The BOJ’s massive quantitative and qualitative easing program continues to expand its balance sheet. This stimulative policy contrasts the Fed balance sheet reduction.

Yield Curve Control
  • BOJ targets 10-year yield near 0%
  • Widened target band to 0.5% in December 2022
  • Likely to maintain yield curve control in 2024

The BOJ controls short and long term yields under its yield curve control policy. Keeping yields suppressed well below global rates maintains downside pressure on the yen.

Fed Policy Analysis

Divergence between the hawkish Fed and dovish BOJ policy stances has been a major USD/JPY price driver.

Interest Rates
  • Fed funds rate raised to 4.25-4.50% range in early 2023
  • Projected to reach 5-5.25% terminal rate by mid 2023
  • Cuts possible in 2024 as inflation slows

The Fed has rapidly raised interest rates to the highest levels since 2007 to curb high inflation. Rate cuts are possible in 2024 if inflation falls significantly towards the 2% target.

Balance Sheet Reduction
  • Fed reducing holdings by $95 billion/month
  • Over $1 trillion runoff expected in 12 months
  • Further reduction likely through 2024

The Fed’s aggressive balance sheet reduction through 2024 will maintain a key policy divergence with the BOJ’s ongoing asset purchases. This supports the dollar versus the yen.

Forward Guidance
  • Markets pricing less hawkish Fed in 2024
  • But rates still seen higher than BOJ’s
  • Divergence supports USD/JPY upside

The Fed is likely to take a data dependent approach in 2024, responsive to the inflation outlook. Still, rates are expected to remain well above the BOJ’s, underscoring ongoing policy divergence.

Geopolitical Factors

Geopolitics can directly impact currency markets. Here are some key factors that may influence the yen and dollar in 2024.

China Relations
  • Yen tends to benefit if Japan-China relations improve
  • But major tensions around Taiwan remain
  • Unlikely to see major rapprochement in election year

While Japan seeks stable ties with its largest trading partner, tensions around Taiwan and regional security issues persist. Major geopolitical shifts appear unlikely in 2024.

Energy Security
  • Japan heavily reliant on imported oil and gas
  • Sanctions disrupt liquefied natural gas imports
  • Energy import costs may keep trade deficit wide

As a net energy importer, Japan remains vulnerable to supply uncertainties. Elevated energy import costs would maintain downward pressure on the trade-sensitive yen.

Technical Analysis

In addition to fundamental drivers, analyzing USD/JPY’s price action, trends, and technical indicators offers clues regarding potential future movements.

Historical Price Action

Looking back at longer term USD/JPY price action provides useful technical context.

  • Traded as high as 124 in 2015 before downtrend
  • Bottomed near 75 in 2011 due to yen safe haven demand
  • Currently trading middle of 30-year range

The USD/JPY remains below its multi-decade highs but holds above the 2011 lows. Focusing on more recent price action gives better insight into the near to medium term trend.

Key Support and Resistance Levels

Monitoring key USD/JPY support and resistance levels provides helpful information on potential price barriers and floors.

  • Resistance around 139/140 where 2022 rally peaked
  • Support around 127 where 2022 lows formed
  • 130 psychological level marks midpoint of recent range

Breaks above resistance around 139 or below support around 127 could signal directional moves as trendline barriers are breached.

Trend Lines and Patterns

Analyzing trends and chart patterns highlights technical formations playing out.

  • Declining resistance trendline connects 2022 highs
  • Rising support trendline connects 2022 lows
  • Potential descending triangle pattern developing

The declining resistance and rising support trendlines form a descending triangle, which could signal a bearish breakdown but requires confirmation.

Moving Averages and Indicators

Tracking moving averages and oscillators provides additional technical clues.

  • Price crossing below 50-day average, hinting downtrend
  • RSI downtrend shows fading upside momentum
  • MACD crossover bearish signal developing

The downside crossovers taking shape on the RSI, MACD, and 50-day moving average point to potential near term weakness.

Ichimoku Cloud Analysis

Ichimoku charts identify support and resistance levels clearly.

  • Price trading under cloud – bearish
  • Lagging Span below candlesticks – bearish
  • Flat Kumo ahead suggests rangebound price action

Ichimoku analysis reinforces the potential for near term weakness and range trading as cloud flattens. Breaks above or below cloud would signal directional trend.

Expert Projections

Examining forecasts from banks, analysts, and expert traders provides useful sentiment and price level indications.

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Major Bank Forecasts

Top global banks see mixed outlooks for USD/JPY in 2024.

BankUSD/JPY Forecast
Goldman Sachs130

Banks predominately expect the USD/JPY to trade in a range between 125-135 during 2024. Some see scope for yen weakness while others forecast modest strengthening.

Analyst Price Targets

Aggregating analyst projections provides wider insight into market expectations.

  • Average 2024 Price Target: 132
  • High Target: 140
  • Low Target: 122

The average year-ahead price target falls around 132, implying limited overall change from current levels. But individual analysts vary widely between 122-140 targets.

Future Positioning/Sentiment

Futures positioning and trader sentiment gives clues on market positioning.

  • Speculators hold substantial USD/JPY net long positions
  • Retail traders leaning bearish in recent months
  • Potential for positioning squeeze if sentiment shifts

While futures positioning remains long dollars/short yen, sentiment appears to be shifting bearish among retail traders. This divergence could fuel volatility if positions unwind.

Trading Strategies

Based on the fundamental and technical outlook, here are some potential trading approaches:

Range Trading Strategies

  • Enter longs near 127 support
  • Book profits on rallies toward 139 resistance
  • Limit risk to 100 pips or below range low

With the USD/JPY potentially rangebound, traders can sell resistance and buy support. Use stop losses to limit risk in case of breakout.

Trend Trading Strategies

  • Sell breakdown below 127 support
  • Target downside projection near 122
  • Alternatively buy break above 139 for upside

A breach of range support or resistance could open trend move. Manage trades with stop loss beyond key levels and trail stops to lock in profits.

Hedging and Risk Management

  • Hedge long USD assets or JPY exposures
  • Consider binary options for directional views
  • Size positions according to risk tolerance

Mitigate portfolio risks by hedging dollar or yen exposures. Use options strategies to limit losses for directional views. Control position sizing and stop losses.


What was the highest USD/JPY exchange rate in 2022?

  • The USD/JPY reached its highest level since 1998 at 139.39 in September 2022, before pulling back over 20%.

Will the Bank of Japan raise interest rates in 2023 or 2024?

  • The BOJ is widely expected to maintain its ultra-accommodative policy stance and is unlikely to raise its -0.10% policy rate over the next couple years barring an unexpected surge in inflation or drastic yen weakness.

What level could trigger intervention by Japan to support the yen?

  • While difficult to pinpoint an exact level, analysts suggest sustained USD/JPY moves above 145 or downward moves below 130 could force the Ministry of Finance to intervene. The authorities are wary of sharp, disorderly yen declines.

How could a potential U.S. recession impact the USD/JPY?

  • Recession risks may rise for the U.S. in 2024 as the Fed tightens policy. This could strengthen the yen’s safe haven appeal. However, Japan’s economic weakness means a global downturn would still weigh on the yen.

Will China and Japan relations improve in 2024?

  • While Japan seeks stable diplomatic and trade ties with China, major geopolitical tensions around Taiwan and regional security issues are likely to persist in 2024 during the U.S. presidential election. This limits prospects for a notable rapprochement.

What technical levels indicate a breakout from the current USD/JPY range?

  • Sustained moves above the 139/140 resistance area or breakdowns below the 127 support level would likely signal trending moves out of the current 127-139 range. Traders can watch these key levels for breakout signals.


The USD/JPY currency pair faces mixed signals in 2024. While BOJ policies remain highly accommodative, Japan’s weak economy and wide trade deficit weigh on the yen. However, slowing U.S. growth and falling inflation reduce the need for an aggressive Fed. This could limit upside for the dollar versus the yen.

Technical analysis suggests the potential for rangebound price action between 127-139 in coming months. But a break above resistance or below support would open up trending moves. Traders can deploy range and breakout strategies while hedging risks. Considering analysis across fundamental, technical, and expert projections paints a holistic picture for forecasting the USD/JPY outlook in 2024.

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