The Japanese yen (JPY) steadied on Friday during Asian trading hours, consolidating the previous session’s strong gains against the US dollar (USD). The currency traded in a tight range amid conflicting signals — weaker domestic data fueling dovish expectations for the Bank of Japan (BoJ), while ongoing speculation about potential government intervention lent support to the yen.
Japan’s newly appointed Prime Minister Sanae Takaichi’s pro-stimulus agenda and a disappointing household spending report have reinforced market bets that the BoJ may delay any further rate hikes. Data released earlier in the day showed household spending rising just 1.8% year-on-year in September, below expectations of 2.5% and slowing from 2.3% in August. On a monthly, seasonally adjusted basis, spending fell 0.7%, suggesting continued weakness in consumer activity.
At the same time, Takaichi is reportedly preparing a ¥10 trillion ($65 billion) economic stimulus package to support growth and ease inflation pressures by late November, which could further deter the BoJ from tightening policy. Minutes from the BoJ’s September 18–19 policy meeting highlighted a cautious approach, with board members acknowledging that while the 2% inflation target has largely been met, risks from trade uncertainty and global growth warrant prudence in adjusting rates.
Despite soft domestic fundamentals, yen bears remain hesitant. Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, reiterated earlier this week that recent currency moves deviate from fundamentals and suggested authorities are closely monitoring speculative activity. His remarks have kept markets alert to the possibility of FX intervention should the yen weaken excessively.
Across the Pacific, the US dollar is attempting to stabilize after slipping to a weekly low overnight. Ongoing uncertainty from the prolonged US government shutdown — now the longest in history — has curbed bullish momentum in the greenback. Meanwhile, investors have slightly pared back expectations of additional Federal Reserve (Fed) easing, with markets now pricing a roughly 69% chance of a December rate cut following hawkish commentary from several Fed officials.
Traders will be watching Friday’s preliminary University of Michigan Consumer Sentiment Index release for fresh cues on the US economy, given the data blackout caused by the shutdown.
USD/JPY technical outlook
The pair’s repeated failures to hold above the mid-154.00s and a break below the 153.30–153.25 resistance-turned-support zone have strengthened the case for further downside in USD/JPY. However, positive momentum indicators on the daily chart suggest that declines may find strong support around the 152.15–152.10 region. A sustained move below the 152.00 mark could open the door for deeper losses, extending the correction from February’s multi-month highs.
On the upside, a recovery above 153.25–153.30 could face initial resistance near 153.65. A decisive break beyond that level may allow the pair to reclaim 154.00, with further gains targeting the 154.45 supply zone — a key pivot point. A sustained move above 154.45 could clear the path toward the 155.00 psychological level and potentially the 155.60–156.00 region.
Overall, the yen’s near-term direction remains driven by the balance between domestic policy caution and global rate dynamics, with intervention risk likely to keep volatility elevated heading into the weekend.
