The Japanese yen (JPY) edged higher on Tuesday after briefly touching a fresh multi-month low against the US dollar (USD) during the Asian session. Market speculation that Japanese authorities could intervene to curb excessive yen weakness has discouraged aggressive selling, keeping USD/JPY capped near the 154.45–154.50 resistance zone. However, the yen’s recovery remains fragile amid uncertainty over the Bank of Japan’s (BoJ) next policy move.
BoJ policy divide and weak consumption cloud yen outlook
The BoJ’s Summary of Opinions released on Monday revealed a split among policymakers regarding the timing of the next rate hike. Some members noted that the time for additional tightening is approaching, while others pointed to lingering economic risks.
BoJ board member Junko Nakagawa reiterated that the central bank would proceed cautiously with future policy decisions, reinforcing expectations that rate increases could be delayed.
The cautious tone coincides with growing speculation that Prime Minister Sanae Takaichi’s administration may pursue large-scale stimulus measures to support growth. Recent data showing weak household spending and subdued consumption have added to doubts about the sustainability of inflation, further dampening prospects for an imminent rate hike.
Japan’s Economy Minister Minoru Kiuchi said on Tuesday that authorities are aware of the impact of high inflation on households and are preparing measures to offset rising costs. He added that the weak yen continues to push up import prices and erode purchasing power—a situation the government aims to address in upcoming policy discussions.
Market sentiment and Fed outlook shape USD/JPY movement
Improved global risk sentiment, driven by progress toward ending the US government shutdown, has weighed on safe-haven demand for the yen. The US Senate cleared a key hurdle on Sunday to advance a funding measure that would reopen federal agencies, boosting investor confidence. The risk-on tone has pushed US Treasury yields higher, lending support to the dollar for a second consecutive day.
Still, expectations for a Federal Reserve rate cut in December currently priced at above 60% according to the CME FedWatch tool—could cap USD gains in the near term. Traders remain focused on upcoming Fed speeches this week for clearer guidance on the central bank’s policy trajectory.
Technical outlook: key resistance at 154.50
From a technical perspective, USD/JPY needs to sustain a move above the 154.45–154.50 barrier to confirm bullish continuation. Momentum indicators remain in positive territory without showing overbought signals, suggesting potential for further upside toward the 155.00 psychological level and possibly 155.60–155.65, before targeting 156.00.
Conversely, any pullback below the 154.00 level may attract fresh buying interest near the 153.60–153.50 region. Strong support is expected around the 153.00 handle, while a decisive break below it could expose the pair to deeper declines toward 152.15–152.10, which should serve as a near-term floor.
