The USD/JPY pair rose to 154.72 on Monday, approaching its peak levels since February, even in light of Japanese economic data that exceeded expectations. Japan’s GDP experienced a contraction of 0.4% quarter-on-quarter in Q3 2025, marking a reversal from the 0.6% growth observed in Q2. Nonetheless, this result surpassed the 0.6% decrease projected by economists. The yen continues to exhibit weakness, largely as a result of Prime Minister Sanae Takaichi’s public urging for the Bank of Japan to uphold its ultra-low interest rate policy. The government maintains that this supportive approach is crucial for fostering economic growth and facilitating a steady increase in inflation.
The government finds itself in conflict with the central bank. BoJ Governor Kazuo Ueda adopted a more measured stance, highlighting that consumption continues to be stable in the context of increasing household incomes and a robust labor market. He noted that core inflation is consistently nearing the 2% target, a situation that could warrant an early adjustment in policy. This results in a noticeable and uncommon public disparity between the government’s dovish fiscal priorities and the central bank’s possible tendency towards monetary normalization.
On the H4 chart, USD/JPY has reached a growth wave to 155.00 followed by a correction to 153.63. The pair is currently establishing a narrow consolidation range near this support level. An upward breakout from this range is anticipated to commence the next phase of the rally, with 155.15 set as the initial target. The bullish scenario is validated by the MACD indicator, with its signal line situated above zero and trending decisively upwards, reflecting ongoing positive momentum. On the H1 chart, the pair achieved a local peak at 155.00 and finalized a corrective structure down to 153.63. A new growth impulse to 154.66 has been completed, resulting in the formation of a compact consolidation range.
An upward breakout from this range is expected, paving the way for a move towards a minimum target of 155.75. The Stochastic oscillator reinforces this perspective. The signal line is positioned above 50 and is ascending rapidly towards 80, indicating robust short-term bullish momentum. The USD/JPY pair is on an upward trajectory, propelled by a fundamental divergence between the dovish stance of the Japanese government and the Bank of Japan, which is prudently preparing for a potential rate increase. The technical structure continues to exhibit a strong bullish sentiment. The recent correction’s completion indicates that the pair is set for additional upward movement, with immediate targets identified at 155.15 and 155.75.