USD/JPY Extends Rally as Yen Hits 9-Month Low Ahead of Key U.S. Data

Uncertainty surrounding Japan’s external trade environment continues to grow after Sanae Takaichi was elected as the country’s new prime minister. She supports a softer monetary stance, in contrast to the Bank of Japan, which has only recently begun its “hawkish” cycle. Another rate hike could stabilize the national currency, but it also carries significant risks, including deflationary pressure. If the BoJ holds off, the yen may continue its downward trend, forcing the regulator to intervene in the FX market — something it has already done in the past.

The minutes from the October 30 meeting show that policymakers may consider adjusting borrowing costs from the current 0.50% if the planned wage hikes materialize and growth forecasts remain intact, though they emphasize ongoing uncertainty related to U.S. trade policy changes. According to officials, Sanae Takaichi’s economic direction remains unclear and requires more time to assess its consequences.

Meanwhile, Toru Suehiro, chief economist at Daiwa Securities Group Inc., believes the Bank of Japan is likely to keep the rate unchanged at the next meeting scheduled for December 18–19. In his view, the regulator will prefer to wait until the draft budget for fiscal year 2026 is presented and discussed — something that will likely happen after the December meeting.

Meanwhile, Toru Suehiro, chief economist at Daiwa Securities Group Inc., believes the Bank of Japan is likely to keep the rate unchanged at the next meeting scheduled for December 18–19. In his view, the regulator will prefer to wait until the draft budget for fiscal year 2026 is presented and discussed — something that will likely happen after the December meeting.

Some support for the yen came yesterday from machinery and equipment orders: in October the indicator accelerated to 16.8% from 11.0% previously, beating market expectations of 9.9%.

At the same time, investors are awaiting the end of the U.S. government shutdown, which will trigger the release of a large number of macroeconomic reports that have been delayed due to the federal government halt. Labor market data will be in the spotlight, as they remain key for the Federal Reserve in shaping the direction of monetary policy. Earlier, Fed Chair Jerome Powell once again stressed that a December rate cut is far from guaranteed, calling it “risky,” clearly hinting at a lack of fresh economic data.

Support and Resistance Levels

Bollinger Bands on the daily chart show a steady upward expansion: the price range is widening to the upside, giving the bulls room to push toward new local highs. MACD is rising, maintaining a solid buy signal (the histogram remains above the signal line). The Stochastic indicator also continues to trend upward but is approaching overbought territory, indicating short-term risks of a pullback in the U.S. dollar.

Resistance levels: 155.04, 155.50, 156.00, 156.50.

Support levels: 154.50, 153.70, 153.00, 152.24.

Trading Scenarios and USD/JPY Forecast

Long positions may be opened after a confident breakout above 155.04, targeting 156.00. Stop-loss: 154.50. Estimated duration: 1–2 days.

A rejection from 155.04 as resistance followed by a breakdown below 154.50 could signal the start of new short positions with a target at 153.50. Stop-loss: 155.00.