The Japanese Yen (JPY) holds modest recovery gains heading into the European session, pulling USD/JPY away from its highest level since February, reached earlier on Tuesday.
The latest bout of JPY weakness prompted verbal intervention from Japan’s Finance Minister Satsuki Katayama, and the broader risk-off mood is offering additional support to the safe-haven currency. Meanwhile, the absence of sustained US Dollar (USD) buying keeps USD/JPY pinned near the 155.00 psychological level.
Reports that Prime Minister Sanae Takaichi is preparing tax cuts to boost consumption have revived concerns about Japan’s long-term fiscal outlook. Coupled with a disappointing Q3 GDP reading, the developments could pressure the Bank of Japan (BoJ) to delay further rate hikes—an outcome that generally weighs on the yen. Additionally, firmer Federal Reserve (Fed) expectations continue to lend some support to the USD and the pair. Traders, however, remain cautious ahead of the FOMC Minutes and the delayed US Nonfarm Payrolls (NFP) report later this week.
Japanese yen draws support from intervention fears and weaker risk tone
Nikkei Asia reported late Monday that Prime Minister Sanae Takaichi will launch tax-reform discussions this week, aiming to stimulate consumption and investment by cutting select taxes while raising others and eliminating certain breaks to offset fiscal imbalances.
The ruling Liberal Democratic Party (LDP) and its coalition partner will also review next year’s tax package, which includes the planned removal of gasoline and diesel surcharges—an adjustment expected to create a ¥1.5 trillion revenue shortfall.
Fresh government data on Monday confirmed that Japan’s economy contracted for the first time in six quarters, dampening expectations of an imminent BoJ rate hike and intensifying political resistance to tighter policy.
Finance Minister Satsuki Katayama warned Tuesday of recent “one-sided and rapid” yen movements, reinforcing speculation of possible intervention. She added that authorities are monitoring FX markets with a heightened sense of urgency, discouraging traders from taking aggressive bearish positions on the yen.
At the same time, several Fed officials have signaled caution toward additional monetary easing in the absence of new US data, prompting markets to scale back expectations for a December rate cut. This has helped support the USD and the USD/JPY pair.
Still, dollar bulls appear hesitant ahead of key event risks. Market focus now turns to Wednesday’s FOMC Minutes, Thursday’s delayed NFP report, and scheduled remarks from influential FOMC speakers on Tuesday—all of which could shape near-term USD demand and trading opportunities in USD/JPY.
USD/JPY could attract buyers near 154.50–154.45 resistance breakpoint
Technically, Monday’s close above the 155.00 level may signal renewed bullish momentum in USD/JPY. Daily chart oscillators remain in positive territory and are not yet overstretched, suggesting that the broader bias continues to favor upside continuation. A decisive break above the 155.60–155.65 resistance zone could pave the way for a move toward the 156.00 round figure.
Conversely, any corrective dip below 155.00 is likely to find strong buying interest near the 154.50–154.45 region—a key pivot area. A clear move beneath this support could trigger technical selling pressure, exposing 154.00 initially, followed by 153.60–153.50 and ultimately the 153.00 handle.
