USD/JPY Outlook: Yen Under Pressure as BOJ Signals Caution, Key Levels 155–157 in Focus

The yen remains under pressure amid growing concerns about new fiscal measures proposed by Japan’s Prime Minister Sanae Takaichi. The new leader, who supports an ultra-loose monetary stance, has previously stated that she intends to introduce broad tax incentives to stimulate domestic consumption and investment. Today, Bank of Japan Governor Kazuo Ueda will hold his first bilateral meeting with the new prime minister as the national currency slides to a nine-month low. Market expectations that Takaichi may push the central bank to slow the pace of tightening have prompted investors to sell both the yen and Japanese government bonds.

Fresh macroeconomic data released earlier shows industrial production accelerating in September: annual growth rose from 3.4% to 3.8%, while monthly growth increased from 2.2% to 2.6%. At the same time, third-quarter GDP contracted by 0.4% after a 0.6% increase previously, though the figure still beat forecasts of –0.6%. Traders are also digesting the minutes from the latest Bank of Japan meeting. When asked why the BoJ is raising rates despite core inflation remaining below the 2.0% target, Governor Ueda explained that achieving the target sustainably over the long term means not only pushing inflation upward but also preventing excessive inflationary pressure. He added that keeping monetary policy too loose for too long also carries risks.

In the United States, markets await a major batch of September labor-market data on Thursday at 15:30 (GMT+2), which was delayed due to the government shutdown. Forecasts suggest nonfarm payrolls will rise by 50,000 after a 22,000 increase the previous month. Average hourly earnings are expected to hold at 0.3% month-over-month and 3.7% year-over-year, signaling further stabilization of inflation risks. The unemployment rate is projected to remain at 4.3%. Weekly jobless-claims data will also be released: initial claims may rise from 218,000 to 227,000, while continuing claims may adjust from 1.926 million.

Support and resistance levels

Bollinger Bands on the daily chart show a moderate upward slope: the price range is widening to the upside, though momentum is struggling to keep up with the latest bullish impulse. MACD is moving higher, maintaining a weak buy signal (the histogram is above the signal line). Stochastic has flattened near the 80 level, continuing to signal overbought risks for the US dollar in the very near term.

Resistance levels: 155.50, 156.00, 156.50, 156.90.

Support levels: 155.04, 154.50, 153.70, 153.00.

Trading scenarios and USD/JPY outlook

Short positions can be considered after a confident breakout below 154.50, targeting 153.00. Stop-loss: 155.25. Expected duration: 2–3 days.

A resumption of bullish momentum with a breakout above 155.50 may signal new long positions with a target of 156.50. Stop-loss: 155.04.