USD/JPY in the eye of a storm! The yen is dragged down by weak data, while the dollar is pressured by the government shutdown.
2025-11-07 14:11:22
On Friday (November 7) in Asian trading, the US dollar rebounded slightly against the Japanese yen, currently trading around 153.40, up about 0.23%, recovering some of the losses from the previous trading day. Disappointing Japanese household spending data released earlier in the day suggested weak consumer spending could dampen demand-driven inflation and allow the Bank of Japan, under new Prime Minister Sanae Takaichi's supportive stance on economic stimulus, to postpone further interest rate hikes, potentially putting selling pressure on the yen.
Meanwhile, the minutes of the Bank of Japan's September policy meeting maintained the possibility of a near-term interest rate hike. Furthermore, speculation that Japanese authorities might intervene in the market to prevent further depreciation of the yen may dampen bearish bets on the yen.
On the other hand, the dollar remains on the defensive due to concerns that a prolonged US government shutdown could negatively impact economic performance. This, in turn, could limit any significant appreciation of the dollar against the yen.
Data released Friday morning showed that Japanese household spending rose only 1.8% year-on-year in September, below the expected 2.5% and the previous month's 2.3%. The seasonally adjusted month-on-month figure fell 0.7%, indicating signs of cooling in private consumption.
Meanwhile, reports indicate that Japan's new Prime Minister Sanae Takaichi is finalizing an economic stimulus package of approximately $65 billion to address inflation and growth concerns, with plans to fund it through a supplementary budget in late November. Furthermore, the Bank of Japan remains cautious about further interest rate hikes.
The minutes of the Bank of Japan's September policy meeting showed that the central bank will maintain a cautious path of interest rate hikes as policymakers weigh inflation dynamics and trade risks. However, committee members noted that given the Bank of Japan has largely achieved its 2% price stability target, the central bank may return to a rate hike path.
Jun Mimura, Japan's Vice Finance Minister for International Affairs and a top foreign exchange official, said on Wednesday that the yen's recent movements have deviated from fundamentals. He added that long positions in the yen have continued to shrink amid market speculation about Japan's macroeconomic policies, particularly fiscal policy.
The dollar is consolidating its losses from the previous day as market concerns about the economic risks posed by a prolonged U.S. government shutdown keep bulls on the sidelines. The deadlock remains unresolved after Democrats indicated they are prepared to block Republican plans to force a vote on Friday.
Following hawkish comments from a series of influential FOMC members, the market has been lowering its expectations for further easing by the Federal Reserve, with the probability of a rate cut in December now estimated at around 69%. This has limited the dollar's decline and may help attract some bargain hunting for the dollar against the yen.
With the longest government shutdown in U.S. history halting official data releases, traders are now closely watching the preliminary release of the University of Michigan's U.S. Consumer Sentiment Index. This data, along with speeches by Federal Reserve officials, will influence the dollar's movement and could create short-term trading opportunities before the weekend.
The USD/JPY pair has recently encountered resistance around 154.45, and the overnight break below the 153.30-153.25 resistance-turned-support zone provides a basis for further depreciation.
On the downside, any further decline is likely to find strong support around the 152.15-152.10 area. A sustained break below the 152.00 level would be seen as a new trigger for the bears and pave the way for a pullback following the recent high of 154.48 reached in February.
On the upside, the exchange rate may face resistance around 153.65. If it can break through this resistance level, USD/JPY is expected to regain the 154.00 level and further test 154.45, which has now become a key pivot point. If it breaks through effectively, the exchange rate may climb to the psychological level of 155.00, and then challenge the 155.60-155.65 resistance zone and the psychological level of 156.00.
(USD/JPY daily chart, source: FX678)
At 14:11 Beijing time, the US dollar was trading at 153.38/39 against the Japanese yen.
Meanwhile, the minutes of the Bank of Japan's September policy meeting maintained the possibility of a near-term interest rate hike. Furthermore, speculation that Japanese authorities might intervene in the market to prevent further depreciation of the yen may dampen bearish bets on the yen.
On the other hand, the dollar remains on the defensive due to concerns that a prolonged US government shutdown could negatively impact economic performance. This, in turn, could limit any significant appreciation of the dollar against the yen.
The yen weakened slightly as weak Japanese data exacerbated uncertainty surrounding the central bank's policy, and fiscal concerns continued to escalate.
Data released Friday morning showed that Japanese household spending rose only 1.8% year-on-year in September, below the expected 2.5% and the previous month's 2.3%. The seasonally adjusted month-on-month figure fell 0.7%, indicating signs of cooling in private consumption.
Meanwhile, reports indicate that Japan's new Prime Minister Sanae Takaichi is finalizing an economic stimulus package of approximately $65 billion to address inflation and growth concerns, with plans to fund it through a supplementary budget in late November. Furthermore, the Bank of Japan remains cautious about further interest rate hikes.
The minutes of the Bank of Japan's September policy meeting showed that the central bank will maintain a cautious path of interest rate hikes as policymakers weigh inflation dynamics and trade risks. However, committee members noted that given the Bank of Japan has largely achieved its 2% price stability target, the central bank may return to a rate hike path.
Jun Mimura, Japan's Vice Finance Minister for International Affairs and a top foreign exchange official, said on Wednesday that the yen's recent movements have deviated from fundamentals. He added that long positions in the yen have continued to shrink amid market speculation about Japan's macroeconomic policies, particularly fiscal policy.
The dollar is consolidating its losses from the previous day as market concerns about the economic risks posed by a prolonged U.S. government shutdown keep bulls on the sidelines. The deadlock remains unresolved after Democrats indicated they are prepared to block Republican plans to force a vote on Friday.
Following hawkish comments from a series of influential FOMC members, the market has been lowering its expectations for further easing by the Federal Reserve, with the probability of a rate cut in December now estimated at around 69%. This has limited the dollar's decline and may help attract some bargain hunting for the dollar against the yen.
With the longest government shutdown in U.S. history halting official data releases, traders are now closely watching the preliminary release of the University of Michigan's U.S. Consumer Sentiment Index. This data, along with speeches by Federal Reserve officials, will influence the dollar's movement and could create short-term trading opportunities before the weekend.
The USD/JPY pair has repeatedly encountered resistance around 154.45, and its upward trend is showing signs of fatigue.
The USD/JPY pair has recently encountered resistance around 154.45, and the overnight break below the 153.30-153.25 resistance-turned-support zone provides a basis for further depreciation.
On the downside, any further decline is likely to find strong support around the 152.15-152.10 area. A sustained break below the 152.00 level would be seen as a new trigger for the bears and pave the way for a pullback following the recent high of 154.48 reached in February.
On the upside, the exchange rate may face resistance around 153.65. If it can break through this resistance level, USD/JPY is expected to regain the 154.00 level and further test 154.45, which has now become a key pivot point. If it breaks through effectively, the exchange rate may climb to the psychological level of 155.00, and then challenge the 155.60-155.65 resistance zone and the psychological level of 156.00.
(USD/JPY daily chart, source: FX678)
At 14:11 Beijing time, the US dollar was trading at 153.38/39 against the Japanese yen.
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