USD\/JPY stabilised this morning following a four-session decline, last recorded at 147.10 levels. Analysts suggest daily momentum shows mild bearish tendencies with a moderated decline in RSI, suggesting potential for 2-way trades amid political risks. Resistance levels are identified at 147.80 and 148.30, while support lies at 146.50\/70 and 145.40.<\/p>\n
Japan’s LDP party is scheduled to choose its leader on Saturday, with expectations that JPY weakness may reverse as political uncertainty wanes and the BoJ proceeds with policy normalisation. Key factors such as wage growth, services inflation, and economic activity in Japan are anticipated to support this shift. The upcoming BoJ meeting is on 30 October, with another in December, where a rate hike is expected, though an earlier adjustment in October is considered plausible.<\/p>\n
The divergence between Fed and BoJ policies is anticipated to guide USD\/JPY’s general movement downwards. In the short term, concerns regarding the US government shutdown offer additional momentum for JPY strength, driven by proxy demand for safe-haven assets. Markets are nearing the pricing of a rate hike at the December meeting, accentuating the likelihood of JPY support.<\/p>\n
Given the consolidation in USD\/JPY around 147.10, we see opportunities to lean against any strength in the coming weeks. Rallies toward the resistance levels of 147.80 and 148.30 should be viewed as potential entry points for short positions. The daily momentum indicators are starting to turn bearish, supporting this view.<\/p>\n
We believe the Bank of Japan will proceed with policy normalization, especially since Japan’s core CPI for August 2025 registered at 2.8%, staying above the 2% target for over a year. The historic wage growth confirmed in the 2024 and 2025 “Shunto” negotiations provides a solid foundation for the BoJ to act. Once the political uncertainty from this weekend’s LDP leadership vote fades, the focus will return to monetary policy.<\/p>\n
Markets are increasingly preparing for a rate hike, with overnight index swaps now implying a 75% probability of a 10-basis-point hike at the BoJ’s December 2025 meeting. We believe an earlier move at the October 30th meeting is plausible, which would surprise the market and likely push USD\/JPY lower. This potential for an upside surprise should cap any significant gains in the currency pair.<\/p>\n
On the US side, the ongoing government shutdown is now in its second day, creating safe-haven demand for the yen and recalling the risk-off sentiment seen during the 35-day shutdown of 2018-2019. This is compounded by the latest US Non-Farm Payrolls report for September 2025, which showed job growth slowing to 150,000, reinforcing the view that the Fed’s tightening cycle is over. The narrowing policy divergence between a hiking BoJ and a steady Fed points to a lower USD\/JPY.<\/p>\n
For derivative traders, this outlook suggests buying put options on USD\/JPY to position for a move down towards the 146.50 support level. Selling call spreads with a ceiling around the 148.30 resistance could also be a viable strategy to capitalize on the expected limited upside. These positions align with the fundamental view that the pair’s broader direction is to the downside.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/JPY steadies as political clarity, BoJ policy shifts, and safe-haven demand support potential yen strength.<\/p>\n","protected":false},"author":62,"featured_media":17050,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-31480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=31480"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31480\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17050"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=31480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=31480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=31480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}