The Japanese yen extended its losses on Wednesday’s Asian session, slipping to its weakest level against the U.S. dollar since February 12. Prime Minister Sanae Takaichi’s comments favoring a low-rate environment to support a fragile recovery, combined with the Bank of Japan’s reluctance to signal further tightening, have kept downward pressure on the safe-haven yen. At the same time, growing optimism around a deal to end the U.S. government shutdown has bolstered the dollar and further weighed on the yen.
That said, Monday’s release of October BoJ meeting minutes revealed that some policymakers see a December rate hike as possible, and whispers of potential intervention to curb any runaway yen weakness may be tempering aggressive bearish bets. In addition, dovish Fed expectations and concerns over the shutdown’s economic fallout could limit how far the dollar gains, helping to cap USD/JPY’s advance.
On Wednesday, PM Takaichi warned that food-driven inflation could hurt Japan’s economy and pledged to work closely with the BoJ to foster sustainable, wage-led price increases. Economist Takuji Aida—recently appointed to Takaichi’s growth-strategy panel—told the Nikkei that the central bank should hold off on any rate increase until at least January, citing signs of a Q3 contraction.
Meanwhile, Tokyo plans to finalize a fresh stimulus package on November 21, urging the BoJ to strike a balance between stable prices and stronger growth—another nod to Takaichi’s low-rate stance. In the U.S., the Senate’s approval of legislation to reopen the federal government—ending the longest shutdown in history—has reignited risk-on flows, which also weigh on the yen.
Economists estimate the shutdown shaved 1.5–2.0% off quarterly U.S. GDP growth, while markets have priced in a roughly 68% chance of a Fed rate cut in December. Those dovish expectations are keeping the dollar in check. With no major U.S. data scheduled for Wednesday, traders will instead look to speeches by key FOMC members for clues on the Fed’s next moves, a factor likely to drive USD/JPY in the near term.
USD/JPY looks set to extend its gains, with a break above 154.45–154.50 likely key.
Technically, USD/JPY bulls will want to see a clear and sustained break above the 154.45–154.50 zone before adding fresh long positions. With daily-chart oscillators still in healthy bullish territory (and far from overbought), the pair could then set its sights on the 155.00 round number, followed by the 155.60–155.65 area en route to 156.00.
On the downside, any pullback under 154.00 may offer a buying opportunity around the overnight low near 153.65, likely capping losses around 153.00. However, a decisive break below that level would open the door to deeper declines toward 152.15–152.10, which would become the next near-term support. A clear breach of 152.10 could shift the short-term bias back toward the bears.
