USD/JPY continued its upward trend during the Asian trading session, currently trading around 152.50. The yen has come under pressure as new Japanese Prime Minister Sanae Takaichi is expected to unveil a massive stimulus package that could surpass last year's 13.9 trillion yen household inflation relief plan.

In addition, the market generally expects the Bank of Japan (BoJ) to keep interest rates unchanged next week and may consider raising interest rates in January next year. Short-term interest rate expectations will put some pressure on the yen.

On the dollar side, optimistic global trade expectations are supporting the USD/JPY pair. US President Trump is expected to reach multiple agreements with Asian leaders next week, covering soybean exports and Asian countries' purchases of Russian crude oil. This is boosting demand for the dollar in the short term.

However, the US government shutdown has increased market uncertainty, and the delay in the release of key economic data (including non-farm payroll data NFP) has increased volatility risks in the short-term trend of the US dollar.

The CME FedWatch Tool shows that the market expects a 25 basis point rate cut by the Federal Reserve in October with an almost 97% probability, and another rate cut in December with an estimated 96% probability. Overall, USD/JPY is being driven in the short term by the yen's weakness and the dollar's support. However, delayed US economic data and Fed policy expectations continue to create market uncertainty, and the pair is likely to remain range-bound and firm in the near term.

USD/JPY daily chart shows that short-term bullish momentum continues, with prices under pressure in the 152.80–153.00 resistance zone, and support below focusing on the 151.80–152.20 range.

If the USD continues to strengthen or the JPY weakens further, it could break through resistance and test 153.50. If the USD comes under pressure or the JPY corrects due to market concerns about stimulus plans, a short-term decline to 151.50–152.00 is possible. The overall technical outlook is bullish, but attention should be paid to news developments.


Editor's opinion:

USD/JPY's continued rise is primarily supported by a weaker yen and positive trade news for the US dollar. However, the US government shutdown and expectations of a Federal Reserve rate cut are adding to short-term uncertainty. Focus on Japan's fiscal stimulus package, the US dollar index, and changes in global trade sentiment.