The Japanese Yen has experienced some intraday selling pressure amid subdued domestic economic data and ongoing uncertainties surrounding the Bank of Japan’s monetary policy. The recent release of Japan’s household spending figures showed a modest increase of 1.8% year-on-year in September, falling short of expectations and signaling a slowdown in consumer activity. On a monthly, seasonally adjusted basis, expenditure declined by 0.7%, indicating a slight cooling of private consumption, which underpins weaker inflation prospects.
This softer data, combined with Japan’s fiscal concerns and the emerging debate over the timing of interest rate hikes, has contributed to the Yen’s decline from its over-one-week high against the US Dollar. The incoming government is reportedly focused on finalizing a substantial economic stimulus package of approximately $65 billion, aimed at supporting growth and addressing inflationary pressures. Meanwhile, the Bank of Japan remains cautious, emphasizing the possibility of maintaining low rates for the foreseeable future despite signs that its 2% inflation target may be nearing attainment.
Policy minutes from the last BoJ meeting revealed a reserved stance on rate hikes, with policymakers weighing inflation dynamics alongside trade risks. The central bank indicated that, depending on future economic developments, there could be scope for tightening monetary policy, though no immediate action is anticipated. Japanese authorities are also alert to potential intervention to prevent excessive Yen weakness, which could further constrain downside moves in the currency.
Meanwhile, across the Pacific, the US Dollar remains under pressure amid concerns that a prolonged government shutdown could hamper economic growth. Political gridlock has kept traders cautious, with some focusing on the possibility of a December Federal Reserve rate cut, now priced in at approximately 69%. The upcoming release of the University of Michigan’s US Consumer Sentiment Index is highly anticipated, as the shutdown and data blackout have distorted recent official statistics.
The USD/JPY pair has been susceptible to technical influences, with repeated attempts to breach the 154.00 level failing and a recent dip below 153.30 signaling potential for further downside. Short-term support appears around the 152.10-152.15 zone, with sustained declines below 152.00 risking a deeper retreat from recent highs. Conversely, a break above resistance near 153.65 could open the path toward 154.00 and beyond, with potential targets around 154.45 and the psychological 155.00 level. Market participants will be closely watching these levels for signs of directional bias heading into the weekend.
