Insights 
VT 
The USD/JPY experienced a continuous decline, influenced primarily by falling US Treasury yields, and was last seen at 149.71 levels. Current risks are oriented downwards.
In Japan, attention is on the potential coalition between the LDP and JIP, which could secure 231 seats, just short of the 233 needed for a majority. Such a coalition could advance LDP’s Takaichi towards the Prime Minister role, while opposition parties consider forming their own coalition to contend.
Political Maneuvering In Japan
Political manoeuvring is expected to increase before the parliament convenes on 21 October to vote for a new Prime Minister. Meanwhile, the BOJ Governor Ueda stated that the Bank of Japan’s policy stance remains unchanged, with potential adjustments dependent on economic outlook improvements.
Factors influencing USD/JPY include Japan’s policy decisions, US-China tensions, and risk sentiments. On the technical front, bullish momentum has decreased, and RSI has dropped. Key support levels are at 149.67 and 148.50, with resistance around 150.35, 151, and 151.90. The FXStreet Insights Team comprises journalists curating market observations and insights from experts.
The USD/JPY has extended its decline, tracking lower US yields to sit around 149.71. We see the risks as skewed to the downside in the near term. The focus is now squarely on the upcoming parliamentary vote for Prime Minister on October 21st.
Political jostling ahead of the vote is creating significant uncertainty, especially with the LDP and JIP coalition talks that could bring Takaichi closer to the PM role. This type of event-driven risk is a classic trigger for higher implied volatility. Traders should consider buying options, like puts or straddles, to position for a potential sharp move after the October 21st decision.
Market Reactions And Strategies
Recent data supports this cautious view, with the national CPI for September 2025 coming in at 2.9%, slightly above consensus and keeping pressure on the BOJ. We’ve seen the Cboe FX Yen Volatility Index (JYVIX) tick up to its highest level in three months, reflecting market nervousness. This is reminiscent of the heightened intervention alerts we experienced back in 2022 and 2023 when the pair traded in similar territory.
Governor Ueda’s remarks suggest the Bank of Japan is in a holding pattern for now, waiting for more confidence in their outlook. However, a new government could alter the path of policy normalization, especially concerning Japan’s debt and deficit. This underlying policy uncertainty supports strategies that benefit from a stronger yen, such as buying USD/JPY put options with expirations in late November to capture any post-vote policy shifts.
The technical picture reinforces this bearish bias, as daily momentum has faded. With the next support seen at 149.67 and then 148.50, traders could look at put options with strike prices around these levels. Conversely, the resistance at 150.35 offers an opportunity to sell call options or structure bear call spreads, betting that the pair will fail to rally past that point in the coming weeks.
