The Japanese Yen remains weak against the rising US Dollar, close to its lowest level since mid-February. Japan’s potential fiscal spending and hesitation to raise interest rates contribute to this decline.

Concerns about economic risks from a prolonged US government shutdown could slow down further Yen depreciation. Conversely, the strong US Dollar gains support from the Federal Reserve’s hawkish stance, boosting expectations for the USD/JPY currency pair.

Prime Minister’s Fiscal Support

Japan’s Prime Minister supports fiscal spending despite inflation, fostering beliefs of interest rate delays by the Bank of Japan. USD sustains its position with a three-month peak, driven by Federal Reserve comments and market optimism over improved US-China trade relations.

The USD/JPY pair shows bullish trends, driven by technical indicators and positive market sentiment. Any correction in USD/JPY from recent highs may encounter support around the 153.65 level, with further support seen near the 153.00 mark. If breached, it could reach the 151.00 area.

The Federal Reserve uses tools like interest rate adjustments and, in extreme cases, quantitative easing or tightening, affecting the Dollar’s value. These measures aim to ensure price stability and full employment in the US economy.

As of today, November 3, 2025, the Japanese Yen continues to show weakness against the US Dollar, with the USD/JPY pair trading near 158.50. The core dynamic of policy divergence that was identified years ago remains firmly in place. The Bank of Japan has only managed a single, cautious rate hike to 0.1% earlier in 2025, which has done little to close the wide interest rate gap with the United States.

Currency Intervention and Trading Strategies

While the prediction of Sanae Takaichi becoming Prime Minister did not come to pass, the current administration has maintained a course of fiscal stimulus to support the economy. This policy, combined with the BoJ’s reluctance to aggressively tighten, continues to weigh on the yen. This confirms the long-held view that Japan’s authorities prioritize economic growth over currency strength for now.

Meanwhile, the US Federal Reserve is holding firm with its “higher for longer” interest rate stance, as inflation remains persistent. Recent data showed the October 2025 core Consumer Price Index (CPI) at 3.4%, still significantly above the Fed’s 2% target. This keeps the US Dollar well-supported and fuels the upward momentum in USD/JPY.

For derivative traders, the primary risk is no longer if the yen will weaken, but the threat of official intervention from Japanese authorities. We saw authorities step in during 2024 when the pair crossed the 160 level, and this threshold remains a critical psychological barrier. Any approach towards that level in the coming weeks will dramatically increase the probability of sharp, sudden JPY strengthening.

Given the strong underlying uptrend but high risk of a sudden reversal, buying outright USD/JPY call options has become expensive and risky. A more prudent strategy would be to use bull call spreads, which allow traders to profit from a continued gradual rise towards the 159.50-160.00 area. This approach defines the risk and caps the potential profit, making it a more controlled way to trade the expected upward drift while guarding against a sudden intervention-led collapse.

Looking back, the technical breakout above the 155.00 mark, once seen as a distant psychological target, was the key catalyst for the most recent leg up. That level has now flipped from a major resistance into a significant area of support. Any corrective dips will likely be bought up aggressively well before reaching that zone, with traders now watching the 157.00 level as the first line of defense.

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