Uncertain Japanese Yen Policy Outlook, Depreciation Pressure Difficult to Ease
Japan’s ruling party legislative group recently proposed compiling a massive supplementary budget exceeding 25 trillion yen to support Prime Minister Takaichi Sanae’s economic stimulus plan. This move has raised market concerns about government debt pressure, with 40-year Japanese government bond yields reaching historic highs. Against this backdrop of fiscal expansion, the Bank of Japan (BoJ) faces uncertain policy prospects—Takaichi Sanae emphasizes that Japan still faces deflation risks and hopes the central bank achieves its target based on wage-driven inflation rather than relying on food price increases. Her clearly negative stance on BoJ rate hikes will further delay market expectations for policy tightening, becoming the core factor behind the yen’s poor recent performance.
Technical Analysis Shows USD/JPY Poised for Further Upside
During Wednesday’s Asia-Pacific trading session, USD/JPY received continuous support above the 155.00 psychological level, with oscillating indicators showing positive signals that suggest the currency pair’s technicals are biased toward bullish sentiment. The exchange rate’s low touched levels last seen in late February, yet upside momentum remains strong. From a technical perspective, further breakthrough of the 156.00 round level is a high-probability event; if momentum persists, the rate could continue climbing toward the 156.50-156.60 zone, with subsequent targets pointing toward 157.00 and 157.35 levels.
Regarding downside support, should corrective pullbacks encounter resistance near 155.00, they may approach the 154.50-154.45 zone. This level should serve as a critical pivot point—if breached below, USD/JPY will face further downside pressure, with targets pointing toward the 154.00 round level, extending further to support zones at 153.60-153.50 and 153.00. Simultaneously, other emerging market currency pairs such as rupee/dollar also face pressure from dollar strength.
Increasing numbers of market participants anticipate that Japanese authorities may intervene in foreign exchange markets to stem further yen depreciation, causing short traders to remain reserved about new positions. Global risk-aversion sentiment also provides some support for the safe-haven yen, while broader stock market declines further limit yen depreciation.
On the other hand, while the dollar should theoretically receive fundamental support, concerns about economic momentum erosion from the longest U.S. government shutdown in history, coupled with market skepticism regarding the Federal Reserve’s subsequent policy, constrain dollar gains. Federal Reserve Vice Chair Philip Jefferson stated the central bank needs to proceed slowly, while Governor Christopher Waller continues advocating for further rate cuts—these comments have diminished dollar attractiveness.
Key Economic Data Will Dominate Near-Term Moves
The FOMC meeting minutes to be released later this week will have a decisive impact on dollar price dynamics. Subsequently, market attention will focus on the U.S. nonfarm payrolls report to be released Thursday—this data should provide substantive price-driving momentum for USD/JPY, with traders advised to closely monitor this key data release to adjust positions accordingly.
ドル/円のテクニカル面では上昇エネルギーが十分であり、ルピーなどの新興通貨の圧力も顕著に現れています
Uncertain Japanese Yen Policy Outlook, Depreciation Pressure Difficult to Ease
Japan’s ruling party legislative group recently proposed compiling a massive supplementary budget exceeding 25 trillion yen to support Prime Minister Takaichi Sanae’s economic stimulus plan. This move has raised market concerns about government debt pressure, with 40-year Japanese government bond yields reaching historic highs. Against this backdrop of fiscal expansion, the Bank of Japan (BoJ) faces uncertain policy prospects—Takaichi Sanae emphasizes that Japan still faces deflation risks and hopes the central bank achieves its target based on wage-driven inflation rather than relying on food price increases. Her clearly negative stance on BoJ rate hikes will further delay market expectations for policy tightening, becoming the core factor behind the yen’s poor recent performance.
Technical Analysis Shows USD/JPY Poised for Further Upside
During Wednesday’s Asia-Pacific trading session, USD/JPY received continuous support above the 155.00 psychological level, with oscillating indicators showing positive signals that suggest the currency pair’s technicals are biased toward bullish sentiment. The exchange rate’s low touched levels last seen in late February, yet upside momentum remains strong. From a technical perspective, further breakthrough of the 156.00 round level is a high-probability event; if momentum persists, the rate could continue climbing toward the 156.50-156.60 zone, with subsequent targets pointing toward 157.00 and 157.35 levels.
Regarding downside support, should corrective pullbacks encounter resistance near 155.00, they may approach the 154.50-154.45 zone. This level should serve as a critical pivot point—if breached below, USD/JPY will face further downside pressure, with targets pointing toward the 154.00 round level, extending further to support zones at 153.60-153.50 and 153.00. Simultaneously, other emerging market currency pairs such as rupee/dollar also face pressure from dollar strength.
Market Participants Maintain Cautious Outlook, Policy Intervention Expectations Intensify
Increasing numbers of market participants anticipate that Japanese authorities may intervene in foreign exchange markets to stem further yen depreciation, causing short traders to remain reserved about new positions. Global risk-aversion sentiment also provides some support for the safe-haven yen, while broader stock market declines further limit yen depreciation.
On the other hand, while the dollar should theoretically receive fundamental support, concerns about economic momentum erosion from the longest U.S. government shutdown in history, coupled with market skepticism regarding the Federal Reserve’s subsequent policy, constrain dollar gains. Federal Reserve Vice Chair Philip Jefferson stated the central bank needs to proceed slowly, while Governor Christopher Waller continues advocating for further rate cuts—these comments have diminished dollar attractiveness.
Key Economic Data Will Dominate Near-Term Moves
The FOMC meeting minutes to be released later this week will have a decisive impact on dollar price dynamics. Subsequently, market attention will focus on the U.S. nonfarm payrolls report to be released Thursday—this data should provide substantive price-driving momentum for USD/JPY, with traders advised to closely monitor this key data release to adjust positions accordingly.