Key Points
- USDJPY rose 0.3% to 153.87, hovering near a nine-month low of 154.00.
- Japan’s proposed stimulus plan, due 21 November, includes tax cuts and investment incentives for 17 key industries.
The yen continued to lose ground on Monday, falling toward the 154 handle as markets anticipated a sizeable fiscal package under Japan’s new administration. The pair traded around 153.87, up 0.30% intraday, approaching levels last seen earlier this year.
A draft of the economic plan revealed that Prime Minister Sanae Takaichi’s government aims to push the central bank to maintain an accommodative policy while fostering strong growth.
The package, expected to be finalised on 21 November, reportedly features tax cuts and investment incentives for sectors spanning semiconductors, clean energy, and defence.
BOJ Outlook Remains Clouded
The Bank of Japan’s October Summary of Opinions underscored the need for sustained wage growth before considering a rate hike. Policymakers reiterated that premature tightening could undermine fragile recovery momentum.
Market participants remain split on timing, with some expecting a possible rate move in December, though the probability remains low given the government’s pro-growth stance and persistent global uncertainty.
The widening yield gap between Japan and the United States continues to favour dollar strength. Benchmark U.S. 10-year Treasury yields remain near 4.5%, further pressuring the yen.
Technical Analysis
USD/JPY edged higher toward ¥153.87, extending its rebound as buyers defended support near ¥152.80. On the 15-minute chart, the pair is consolidating below ¥154.00, with moving averages aligned in a bullish configuration and the MACD showing positive divergence.
This short-term structure suggests the uptrend remains intact, though momentum has begun to flatten slightly, signalling potential caution ahead of key policy cues.
Fundamentally, the yen remains weighed down by the Bank of Japan’s persistently dovish stance and widening yield gap with the United States.
Finance Minister Suzuki’s recent remarks that authorities are “monitoring FX moves with high urgency” have kept traders on alert for possible intervention, but so far, verbal warnings alone have done little to stem yen weakness.
Cautious Forecast
If fiscal stimulus details prove expansive and the BOJ maintains its dovish tone, USDJPY could remain buoyant above 153.50, potentially testing 154.50 in the near term.
However, any hints of an earlier-than-expected rate adjustment or stronger wage data could trigger a short-term correction back toward 152.80–153.00.
Traders should monitor upcoming Japanese GDP figures and official comments ahead of the 21 November policy outline for fresh directional cues.
