The yen struggles amid uncertainty surrounding the Bank of Japan's policy, while a stronger dollar supports the USD/JPY exchange rate.
2025-11-04 13:46:17
On Tuesday (November 4), the USD/JPY pair touched a high of 154.48, the highest level since February, set on October 30, before falling slightly due to selling pressure. The pair is currently trading around 153.75.
Market expectations that Japan's new Prime Minister Sanae Takaichi will implement an aggressive fiscal spending plan and resist policy tightening have made it difficult for investors to predict the timing of the Bank of Japan's next interest rate hike. This uncertainty, coupled with waning safe-haven demand, has become a key factor continuing to put pressure on the yen.
Meanwhile, Bank of Japan Governor Kazuo Ueda signaled a hawkish stance last week, hinting at a possible rate hike in December or January. Furthermore, market speculation that Japanese authorities might intervene to prevent further yen depreciation could curb aggressive short-selling bets.
On the other hand, as the market lowered its expectations for another rate cut by the Federal Reserve in December, the dollar climbed to a new high since early August (100.03), providing upward support for the dollar against the yen.
With Japan's new Prime Minister Sanae Takaichi supporting fiscal stimulus, the Bank of Japan is hesitant to commit to further interest rate hikes.
Data released last Friday showed that Tokyo's core consumer price index has remained above the central bank's 2% target for three and a half years, providing a basis for the Bank of Japan to further tighten its policy.
In addition, Bank of Japan Governor Kazuo Ueda said last week that the likelihood of achieving the baseline scenario is increasing, and reiterated that the central bank will continue to raise policy rates if the economy and prices move in line with expectations.
While the risk of Japanese authorities intervening in the foreign exchange market may limit further depreciation of the yen, continued dollar buying is supporting the dollar against the yen, keeping it fluctuating below its February highs.
Federal Reserve Chairman Jerome Powell dismissed market expectations for further rate cuts at the December meeting last week, helping the dollar index rise for five consecutive trading days.
The US government shutdown has entered its 35th day, and with Republican and Democratic lawmakers in Congress continuing to deadlock over the appropriations bill, this shutdown is about to break the record for the longest shutdown set in 2019.
Senate Majority Leader John Thune expressed optimism that the government shutdown would end this week, saying the Senate would vote for the 14th time later Tuesday on the Republican-backed appropriations bill that had already passed the House.
Investors are currently concerned that a prolonged government shutdown could cause economic damage. Given this, the market remains cautious before betting on a continued rise in the dollar and further strengthening of the dollar against the yen.
From a technical perspective, the exchange rate broke through the 153.25-153.30 resistance zone last week and subsequently stabilized above the 154.00 level, which is seen as a key signal that triggered the bullish trend in USD/JPY.
Furthermore, the daily chart's oscillators are firmly operating in the positive zone and have not yet entered overbought territory, which provides technical support for further breaking through the 154.75-154.80 intermediate resistance zone and re-challenging the psychological level of 155.00.
On the downside, any technical pullback is expected to find support near the key resistance-turned-support zone of 153.25-153.30. A break below this level would bring attention to the psychological level of 153.00, and a decisive break below that could lead to further declines towards 152.15. A sustained break below 152.00 would negate the recent bullish outlook, pushing the price towards the 151.55-151.50 area and ultimately testing the 151.10-151.00 support zone.
(USD/JPY daily chart, source: FX678)
At 13:45 Beijing time, the US dollar was trading at 153.75/76 against the Japanese yen.
Market expectations that Japan's new Prime Minister Sanae Takaichi will implement an aggressive fiscal spending plan and resist policy tightening have made it difficult for investors to predict the timing of the Bank of Japan's next interest rate hike. This uncertainty, coupled with waning safe-haven demand, has become a key factor continuing to put pressure on the yen.
Meanwhile, Bank of Japan Governor Kazuo Ueda signaled a hawkish stance last week, hinting at a possible rate hike in December or January. Furthermore, market speculation that Japanese authorities might intervene to prevent further yen depreciation could curb aggressive short-selling bets.
On the other hand, as the market lowered its expectations for another rate cut by the Federal Reserve in December, the dollar climbed to a new high since early August (100.03), providing upward support for the dollar against the yen.
Yen bears continue to control the situation, and the propensity for fiscal stimulus is casting a shadow over the Bank of Japan's interest rate hike prospects.
With Japan's new Prime Minister Sanae Takaichi supporting fiscal stimulus, the Bank of Japan is hesitant to commit to further interest rate hikes.
Data released last Friday showed that Tokyo's core consumer price index has remained above the central bank's 2% target for three and a half years, providing a basis for the Bank of Japan to further tighten its policy.
In addition, Bank of Japan Governor Kazuo Ueda said last week that the likelihood of achieving the baseline scenario is increasing, and reiterated that the central bank will continue to raise policy rates if the economy and prices move in line with expectations.
While the risk of Japanese authorities intervening in the foreign exchange market may limit further depreciation of the yen, continued dollar buying is supporting the dollar against the yen, keeping it fluctuating below its February highs.
Federal Reserve Chairman Jerome Powell dismissed market expectations for further rate cuts at the December meeting last week, helping the dollar index rise for five consecutive trading days.
The US government shutdown has entered its 35th day, and with Republican and Democratic lawmakers in Congress continuing to deadlock over the appropriations bill, this shutdown is about to break the record for the longest shutdown set in 2019.
Senate Majority Leader John Thune expressed optimism that the government shutdown would end this week, saying the Senate would vote for the 14th time later Tuesday on the Republican-backed appropriations bill that had already passed the House.
Investors are currently concerned that a prolonged government shutdown could cause economic damage. Given this, the market remains cautious before betting on a continued rise in the dollar and further strengthening of the dollar against the yen.
The USD/JPY pair appears poised for further gains and may retest the key psychological level of 155.00.
From a technical perspective, the exchange rate broke through the 153.25-153.30 resistance zone last week and subsequently stabilized above the 154.00 level, which is seen as a key signal that triggered the bullish trend in USD/JPY.
Furthermore, the daily chart's oscillators are firmly operating in the positive zone and have not yet entered overbought territory, which provides technical support for further breaking through the 154.75-154.80 intermediate resistance zone and re-challenging the psychological level of 155.00.
On the downside, any technical pullback is expected to find support near the key resistance-turned-support zone of 153.25-153.30. A break below this level would bring attention to the psychological level of 153.00, and a decisive break below that could lead to further declines towards 152.15. A sustained break below 152.00 would negate the recent bullish outlook, pushing the price towards the 151.55-151.50 area and ultimately testing the 151.10-151.00 support zone.
(USD/JPY daily chart, source: FX678)
At 13:45 Beijing time, the US dollar was trading at 153.75/76 against the Japanese yen.
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