Dow Jones & Nasdaq 100: Weaker Yen Lifts US Futures Ahead of Critical US Data Releases

This analysis is based on the FXEmpire report published on January 21, 2026, which reported that Dow Jones and Nasdaq 100 futures advanced during Asian trading sessions as a softer yen following weaker Japanese export data fueled demand for risk assets [1]. The Dow Jones E-mini futures climbed 111 points, the Nasdaq 100 E-mini rose 111 points, and the S&P 500 E-mini advanced 22 points, reflecting continued positive momentum from the prior session’s gains [0][1]. The yen weakness, driven by Japan’s December export growth slowdown to 5.1% year-on-year from 6.1% in November, reduced expectations for imminent Bank of Japan tightening and supported risk appetite across US equity futures [1]. Market participants are now focused on a slate of critical US economic data releases including initial jobless claims, Core PCE inflation, and Q4 GDP, which will shape Federal Reserve policy expectations for H1 2026 [1][2][3][4].

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The primary catalyst for the US equity futures rally during Asian trading was the Japanese yen’s weakness following the release of Japan’s December export data. Japan’s exports increased 5.1% year-on-year in December, down significantly from 6.1% in November, signaling weaker external demand and cooling expectations for Bank of Japan monetary tightening [1]. This slowdown in export growth, particularly concerning given that exports to the United States fell 11.1% year-on-year after rising 8.8% in November, may give Bank of Japan doves greater influence in this week’s monetary policy meeting [1].

The USD/JPY pair rose 0.12% to 158.431 during morning trading, fueling yen carry trades and supporting demand for risk assets [1]. This currency movement has significant implications for multinational corporations with substantial Japanese operations and for export-dependent sectors. The yen carry trade dynamics create a feedback loop with equity markets: a weaker yen reduces hedging costs for Japanese investors, potentially increasing their foreign asset purchases and supporting US equity valuations [1].

From a technical perspective, all three major indices are trading above their 50-day and 200-day exponential moving averages, indicating a structurally bullish bias aligned with positive fundamentals [1]. The previous session’s close showed the Dow Jones Industrial Average advancing 1.09% to close at 49,077.24, while the Nasdaq Composite gained 0.90% to reach 23,224.82 [0]. The Russell 2000 demonstrated particular strength with a 1.35% gain, suggesting breadth across market capitalizations beyond large-cap indices [0].

Index	Key Resistance Levels	Support Levels	Current Position
Dow Jones	49,901 (Jan 13 record high), 50,000	49,000, 50-day EMA (48,422)	Above key moving averages
Nasdaq 100	26,000, 26,399 (Oct 30 record high)	50-day EMA (25,462), 25,000	Above key moving averages
S&P 500	7,036 (Jan 13 high), 7,500	50-day EMA (6,877), 6,500	Above key moving averages

Several critical US data points scheduled for release will significantly influence Federal Reserve policy expectations [1][2][3][4]:

: Economists forecast an increase from 198,000 (week ending January 10) to 212,000 (week ending January 17). The prior week’s reading was the second-lowest in two years, indicating continued labor market resilience despite gradual softening [2][3]. A larger-than-expected increase could signal economic deterioration that contradicts the current growth narrative.

: Expected to rise 2.8% year-on-year in November, maintaining elevated but stable inflation levels. Franklin Templeton projects core PCE to remain in the 2.5% to 3.0% range, suggesting persistent but manageable inflationary pressures [2]. If this data exceeds expectations, it could push back Fed rate cut timing and dampen equity valuations.

: Economists forecast the US economy to expand 4.3% quarter-on-quarter, accelerating from 3.3% growth in Q3 [1]. This strong momentum would support the case for risk assets and reinforce expectations of robust economic growth.

Market participants are increasingly pricing in Fed rate cuts for H1 2026, with June being the most likely timing for the next cut [1][2]. The Franklin Templeton outlook expects two rate cuts in 2026, while the Fed’s own projections imply reaching a 3.1% rate by 2028 through two further cuts [2]. This supportive monetary policy outlook has been a key pillar supporting current equity valuations.

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The relationship between yen movements and US equity futures demonstrates the interconnected nature of global capital flows. When Japan’s export data suggested slower growth and reduced BoJ tightening probability, the resulting yen weakness triggered carry trade activity that flowed into US equities [1]. This dynamic is particularly relevant given Japan’s position as a major creditor nation with significant overseas investment portfolios.

The 11.1% year-on-year decline in Japanese exports to the United States warrants particular attention as a potential leading indicator of broader tariff-related disruptions [1]. This development may foreshadow challenges in US-Japan trade relations and could influence BoJ policy calculus given the export-dependent nature of the Japanese economy.

: AI-linked earnings expectations continue to support tech sector momentum. Intel (INTC) is among companies announcing Q4 results this week, which will provide important insights into the technology sector’s health [1].

: Companies with significant Japanese revenue exposure may benefit from yen weakness through improved competitiveness and translated earnings. However, the broader export slowdown suggests caution regarding globally exposed manufacturers.

: Regional banks and financial institutions could see increased activity if the rate cut timeline accelerates, though the sector remains sensitive to yield curve movements and credit quality concerns.

The market’s current confidence appears anchored in expectations of a more dovish Fed stance in 2026, which would have a more lasting positive effect on equities than potential BoJ tightening [1]. However, this positioning creates vulnerability to surprises in either direction on monetary policy. The technical backdrop remains constructive with all major indices trading above key moving averages, suggesting that short-term momentum favors bulls [0][1].

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: A hawkish BoJ stance in Friday’s policy decision could narrow US-Japan rate differentials, potentially triggering a yen-funded position unwind similar to events observed in mid-2024 [1]. This risk is particularly acute given elevated USD/JPY levels near 158, which have attracted significant carry trade positioning.

: If Core PCE data exceeds expectations, particularly if it shows acceleration above the 2.8% forecast, it could substantially temper Fed rate cut expectations and put pressure on equity valuations [1][2].

: A larger-than-expected increase in jobless claims beyond the 212k forecast could signal economic softening that contradicts the current growth narrative embedded in equity prices [2][3].

: Japan’s export decline to the US (11.1% YoY) may foreshadow broader tariff-related disruptions affecting multiple trading partners and sectors [1].

: The 4.3% quarter-on-quarter growth forecast, accelerating from 3.3% in Q3, represents robust economic momentum that could support risk assets and corporate earnings expectations [1].

: The market’s pricing of June 2026 as the most likely timing for the next Fed cut, if realized, would provide ongoing support for equity valuations and potentially extend the current market advance [1][2].

: Continued strength in technology sector earnings, particularly AI-related segments, could provide fundamental support for Nasdaq 100 valuations [1].

: The reduction in US-EU trade tensions has contributed to positive market sentiment, and continued détente could support risk appetite [1].

The current market setup is highly time-sensitive, with multiple catalysts approaching within days:

Catalyst	Timing	Potential Impact
Initial Jobless Claims	January 23	High (labor market signal)
Core PCE Inflation	January 23	High (Fed policy signal)
Q4 GDP Final	January 23	High (growth trajectory)
BoJ Policy Decision	January 24	Very High (yen dynamics)

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The analysis reveals a market environment where currency dynamics, specifically yen weakness following softer Japanese export data, have provided short-term support for US equity futures [1][0]. The technical structure remains constructive with all major indices trading above key moving averages, supporting a structurally bullish bias [1].

Key data points from the analysis include the USD/JPY level at 158.431 (up 0.12%), Japan’s December export growth at 5.1% YoY (down from 6.1%), and the forecast for Q4 US GDP growth at 4.3% QoQ [1][0]. The labor market remains resilient with initial jobless claims expected at 212k, while inflation persists at the 2.8% Core PCE year-on-year level [2][3].

The sustainability of the current rally depends heavily on two factors: the Bank of Japan’s policy decision on Friday and the subsequent US economic data releases [1]. A hawkish BoJ surprise or hotter-than-expected US inflation could quickly reverse current risk-on sentiment, while dovish outcomes could extend the advance.

Market participants should prepare for heightened volatility around these upcoming catalysts and maintain awareness of carry trade positioning sensitivity to BoJ policy surprises [1].

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[0] Ginlix Analytical Database - Market Indices Data (S&P 500, NASDAQ, Dow Jones, Russell 2000)

[1] FXEmpire - “Dow Jones & Nasdaq 100: Weaker Yen Lifts US Futures Ahead of US Data”
https://www.fxempire.com/forecasts/article/dow-jones-nasdaq-100-weaker-yen-lifts-us-futures-ahead-of-us-data-1574224

[2] Franklin Templeton - “From the US Market Desk: Bull action, watching sentiment”
https://www.franklintempleton.com/articles/series/from-the-market-desk

[3] Trading Economics - “United States Initial Jobless Claims”
https://tradingeconomics.com/united-states/jobless-claims

[4] Investing.com - “GDP, jobless claims, PCE and oil inventories data due Thursday”
https://uk.investing.com/news/stock-market-news/gdp-jobless-claims-pce-and-oil-inventories-data-due-thursday-93CH-4463865