The USD/JPY pair experienced a significant rally on Monday, climbing to the 153.00 level and approaching heights not observed since February 2025. The current bullish momentum is fueled by anticipations of substantial fiscal stimulus from Japan’s newly formed government, alongside persistent uncertainty regarding the policy trajectory of the Bank of Japan. The yen has faced ongoing pressure following the election of Prime Minister Sanae Takaichi, whose government is anticipated to implement expansive fiscal spending alongside a supportive monetary policy. Reports indicate that a significant stimulus package, estimated at more than ¥13.9 trillion, may be announced as soon as November. The strategy is designed to assist households while alleviating inflationary pressures.
While the BoJ is anticipated to maintain its current interest rates during this week’s meeting, market participants will be closely monitoring any indications about the criteria for a potential rate increase if inflationary pressures begin to subside. Furthermore, the forthcoming meeting between Prime Minister Takaichi and US President Donald Trump is under observation for additional indications regarding the trajectory of Japan’s economic policy. The USD/JPY pair has experienced an upward breakout from a consolidation range near 151.80, indicating a confirmed uptrend with an initial target set at 153.43. The pair has since achieved a new high at 153.24 and is now experiencing a technical retracement, currently evaluating the 152.43 level from above.
We anticipate that this pullback will be succeeded by another upward movement aiming for the 153.43 target. Subsequently, a more significant correction towards 151.80 is expected before the overarching uptrend continues, with the next key target set at 154.33. The MACD indicator reinforces this perspective, as its signal line remains well above zero and is trending upwards, indicating persistent bullish momentum. The H1 chart indicates that an initial growth wave has reached completion at 153.25. The current emphasis is on advancing towards 153.33. Upon achieving this local target, a corrective decline to a minimum of 152.43 is anticipated.
Upon the completion of this correction, the subsequent phase of the uptrend is anticipated to propel the pair towards 154.33. The Stochastic oscillator has technically confirmed this scenario, with its signal line positioned above 50 and trending robustly towards 80, suggesting that the near-term bullish momentum is still in place. At its core, the expected Japanese fiscal stimulus alongside a consistent stance from the BoJ is exerting downward pressure on the yen. On a technical level, USD/JPY maintains a positive bullish outlook. Although a brief correction is anticipated, the prevailing trend continues to favor upward movement, with significant targets set at 153.43 and ultimately reaching 154.33.