Forex Analysis by Investing.com (Damian Nowiszewski) covering: US Dollar Japanese Yen, US Dollar Index Futures. Read Investing.com (Damian Nowiszewski)'s latest article on Investing.com
Political turmoil in Japan is not conducive to further interest rate hikes, weighing on the yen.With this backdrop, USD/JPY is approaching the 150 yen per dollar barrier.Prime Minister Shigeru Ishiba's surprising shift in economic policy—particularly his suggestion that Japan's economy isn’t ready for further interest rate hikes—sent ripples through the market, pushing the yen lower.
With the pair now testing the critical 150 yen resistance level, traders are eyeing a potential breakout that could set the stage for further gains.At the start of the month, Japan swore in a new government, with Shigeru Ishiba taking over as Prime Minister, defeating the incumbent favorite, Sanae Takaichi. Ishiba was initially expected to back the Bank of Japan's stance on continuing interest rate hikes.
Adding to the uncertainty, early elections have been called for late October, with no clear outcome in sight. This political unpredictability could cause Japan's monetary authorities to delay any further rate hikes until the December meeting—if the data justifies such a move.Japan's inflation dynamics continue to be a key driver of monetary policy decisions. The latest inflation readings showed a rise to 3% for, reinforcing the notion that inflation remains on an upward trajectory.
As the market braces for both U.S. inflation data and continued political developments in Japan, USD/JPY traders should remain vigilant.
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