USDJPY:
The yen weakens amid political reshuffling in Japan and related expectations of more active fiscal support. Markets infer that growth will remain the authorities’ priority, reducing the likelihood of swift monetary tightening. The US–Japan yield differential stays wide, which continues to support demand for the dollar against the yen.
Additional tailwinds for USDJPY come from persistent demand for the dollar as a liquid asset in uncertain conditions. Even with talk of gentle Fed steps, the overall level of US yields remains above Japan’s, where the Bank of Japan is moving very gradually and avoiding abrupt actions.
Key risks to long positions include possible verbal comments from Japanese officials or a sudden drop in global volatility that could trim the dollar’s premium. Still, under today’s configuration of factors, the balance favors a steady move higher, with targets near recent local highs.
Trade recommendation: BUY 152.50, SL 151.50, TP 153.50
Origin: FreshForex
