The USD/JPY briefly fell below the 150 mark! The US dollar is under siege from all sides, and safe-haven buying of the Japanese yen is strong.
2025-10-17 11:58:56
The USD/JPY exchange rate fell for four consecutive trading days, hitting a near two-week low of 149.90 in Asian trading on Friday (October 17), a drop of approximately 0.30%. Renewed signs of trade tensions, coupled with ongoing geopolitical uncertainty, have dampened investor appetite for risky assets and driven some safe-haven flows into the yen. Furthermore, easing concerns about Japan's fiscal health have also contributed to the yen's strength over the past week or so.
Meanwhile, political uncertainty in Japan remains high after the ruling Liberal Democratic Party and Komeito coalition collapsed on Friday, sparking speculation the Bank of Japan may further delay raising interest rates, making yen bulls cautious before making aggressive bets.
On the other hand, the US dollar continued to be under pressure due to the market's dovish expectations for the Federal Reserve and the prolonged shutdown of the US government, which provided support for further declines in USD/JPY.
Trade frictions escalate: Additional port fees for fleet-related ships have triggered global concerns about trade frictions.
New Developments in the Russia-Ukraine Conflict: US President Trump announced Thursday that he would meet with Russian President Vladimir Putin in Budapest, Hungary, to seek an end to the conflict. Meanwhile, Ukrainian President Volodymyr Zelenskyy planned to arrive at the White House later on Friday. Russia launched hundreds of drones, dozens of missiles, and glide bombs on Thursday to attack natural gas facilities in eastern Ukraine. Ongoing geopolitical risks are driving safe-haven flows toward the Japanese yen.
Japan's political landscape is shifting: the coalition between the ruling Liberal Democratic Party and the Komeito Party has broken down, hindering Sanae Takaichi's prospects for the top spot in Japan. The potential adjustment to her Abe-style massive spending and monetary stimulus policies has eased market concerns about Japan's fiscal health, providing additional support for the yen.
Bank of Japan Policy Expectations Adjusted: Market expectations for a year-end Bank of Japan rate hike have intensified, further benefiting the yen. Governor Kazuo Ueda stated that tariffs will have a delayed impact on the global and US economies, and that the Bank of Japan will adjust its monetary support based on the probability of achieving expected economic growth and inflation.
Expectations of Fed easing strengthen: The market is betting that the Fed will cut interest rates twice more in 2025. Chairman Powell's dovish remarks on Tuesday reinforced this expectation, putting pressure on the US dollar.
US government shutdown deadlock: The Senate rejected a short-term funding bill proposed by House Republicans for the tenth time on Thursday, and the congressional deadlock continued to exacerbate market concerns about the economic impact of a long-term shutdown.
Market Outlook: In the absence of US macroeconomic data, the market will continue to look for short-term trading clues from the speeches of FOMC members. USD/JPY is expected to record a significant decline this week and is expected to fall further.
From a technical perspective, USD/JPY faces downside support at the 50% Fibonacci retracement level (149.40) of its rally from this month's high (153.27). A break below this support could accelerate the decline towards around 148.50 (61.8% Fibonacci level). Subsequent selling could serve as a new catalyst for bearish traders, opening the way for a continuation of the correction seen earlier this month, reaching the 153.30-153.25 area (highest point since February).
On the upside, any corrective rally will face initial resistance near 150.30 (38.2% Fibonacci retracement level). 151.00 will then become a key resistance level. A break above this level could trigger short-covering, pushing the exchange rate towards the 151.65 mid-range resistance and further towards the 152.00 round-figure mark. Continued upward momentum could extend to around 152.25, after which bulls may attempt to reclaim 153.00 and retest the multi-month highs of 153.25-153.30.
(USD/JPY daily chart, source: Yihuitong)
At 11:58 Beijing time, the US dollar was trading at 149.97/98 against the Japanese yen.
Meanwhile, political uncertainty in Japan remains high after the ruling Liberal Democratic Party and Komeito coalition collapsed on Friday, sparking speculation the Bank of Japan may further delay raising interest rates, making yen bulls cautious before making aggressive bets.
On the other hand, the US dollar continued to be under pressure due to the market's dovish expectations for the Federal Reserve and the prolonged shutdown of the US government, which provided support for further declines in USD/JPY.
The yen maintains a bullish tone as global safe-haven demand offsets domestic political turmoil in Japan
Trade frictions escalate: Additional port fees for fleet-related ships have triggered global concerns about trade frictions.
New Developments in the Russia-Ukraine Conflict: US President Trump announced Thursday that he would meet with Russian President Vladimir Putin in Budapest, Hungary, to seek an end to the conflict. Meanwhile, Ukrainian President Volodymyr Zelenskyy planned to arrive at the White House later on Friday. Russia launched hundreds of drones, dozens of missiles, and glide bombs on Thursday to attack natural gas facilities in eastern Ukraine. Ongoing geopolitical risks are driving safe-haven flows toward the Japanese yen.
Japan's political landscape is shifting: the coalition between the ruling Liberal Democratic Party and the Komeito Party has broken down, hindering Sanae Takaichi's prospects for the top spot in Japan. The potential adjustment to her Abe-style massive spending and monetary stimulus policies has eased market concerns about Japan's fiscal health, providing additional support for the yen.
Bank of Japan Policy Expectations Adjusted: Market expectations for a year-end Bank of Japan rate hike have intensified, further benefiting the yen. Governor Kazuo Ueda stated that tariffs will have a delayed impact on the global and US economies, and that the Bank of Japan will adjust its monetary support based on the probability of achieving expected economic growth and inflation.
Expectations of Fed easing strengthen: The market is betting that the Fed will cut interest rates twice more in 2025. Chairman Powell's dovish remarks on Tuesday reinforced this expectation, putting pressure on the US dollar.
US government shutdown deadlock: The Senate rejected a short-term funding bill proposed by House Republicans for the tenth time on Thursday, and the congressional deadlock continued to exacerbate market concerns about the economic impact of a long-term shutdown.
Market Outlook: In the absence of US macroeconomic data, the market will continue to look for short-term trading clues from the speeches of FOMC members. USD/JPY is expected to record a significant decline this week and is expected to fall further.
Daily chart technical analysis
From a technical perspective, USD/JPY faces downside support at the 50% Fibonacci retracement level (149.40) of its rally from this month's high (153.27). A break below this support could accelerate the decline towards around 148.50 (61.8% Fibonacci level). Subsequent selling could serve as a new catalyst for bearish traders, opening the way for a continuation of the correction seen earlier this month, reaching the 153.30-153.25 area (highest point since February).
On the upside, any corrective rally will face initial resistance near 150.30 (38.2% Fibonacci retracement level). 151.00 will then become a key resistance level. A break above this level could trigger short-covering, pushing the exchange rate towards the 151.65 mid-range resistance and further towards the 152.00 round-figure mark. Continued upward momentum could extend to around 152.25, after which bulls may attempt to reclaim 153.00 and retest the multi-month highs of 153.25-153.30.
(USD/JPY daily chart, source: Yihuitong)
At 11:58 Beijing time, the US dollar was trading at 149.97/98 against the Japanese yen.
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