Insights 
VT 
Key Points:
- USD/JPY is up 0.52% at 148.163, with resistance building near the 148.20–148.40 zone.
- The LDP leadership election, triggered by Ishiba’s resignation, may prompt yen weakening in the short term.
The Japanese yen continued its slide against the dollar early Monday, with USD/JPY up 0.769 (+0.52%) to 148.163 as of 08:04 GMT. Traders are beginning to price in short-term instability following
Shigeru Ishiba’s resignation, with Japan’s ruling Liberal Democratic Party (LDP) now set to hold a leadership election on 4 October.
The yen could weaken further as markets anticipate policy shifts depending on the incoming leadership. Political turnover typically raises expectations for new fiscal stimulus or shifts in monetary guidance, even if the Bank of Japan (BoJ) remains on its ultra-dovish course.
That said, USD downside risks are beginning to surface, with markets still digesting weaker US data from last week and Fed commentary hinting at peak-rate positioning. This tempers expectations of a prolonged USD/JPY rally above 149.
Technical Overview
USD/JPY is trading at 148.16, up +0.52%, showing strength after rebounding from the 147.88 support zone. The chart highlights a clear recovery from the April low of 139.88, with recent price action consolidating in a range between 147–149.
The moving averages (5,10,30) are tightening, which signals indecision, but the shorter MAs are slightly tilting upward, suggesting buyers may be regaining control.
The MACD is flat but hovering near the zero line, reflecting a pause in momentum after recent volatility.
Overall, the pair remains supported above 147, with resistance around 149–150. A breakout above 150 would strengthen the bullish case, while a drop below 147 could trigger renewed weakness.
Traders should also watch BOJ commentary and US yield movements, as both remain key drivers for yen volatility.
Political Context and Forward Risk
The upcoming LDP vote injects short-term volatility risk into the yen. If the new leadership promises further economic stimulus or leans hawkish on structural reform, the JPY could find its footing again.
However, any ambiguity or populist leaning may push USD/JPY higher on safe haven outflows.
At the same time, traders must weigh Friday’s US CPI release, which could move the needle on Fed expectations. The inflation print will help determine whether the dollar resumes strength or pulls back after peaking.
Cautious Forecast
While political turbulence may weaken the yen further in the coming days, traders remain cautious ahead of this week’s U.S. CPI report and Fed commentary.
A weaker inflation print or dovish tone from policymakers could halt the dollar’s rally, stalling USD/JPY’s advance. Short-term upside may persist, but long-term conviction remains fragile.
