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USD/JPY Holds Firm Amid Fed Independence Concerns and Japan’s Political Stability
Traders' Opinions
Summary:
The USD/JPY steadied around 147.60 on Wednesday, recovering from recent losses as traders weighed U.S. political turmoil over Federal Reserve independence against signs of improving political stability in Japan.
Buy
CLOSEDUSDJPY
End Time
147.996
Entry Price
150.200
TP
147.100
SL
147.011 +0.084 +0.06%
896
Points
Loss
147.100
SL
147.099
CLOSING
147.996
Entry Price
150.200
TP
The U.S. dollar staged a modest rebound against the Japanese yen during Asian trading hours on Wednesday, with USD/JPY climbing back toward 147.60 after slipping in the previous session. The recovery, however, remains fragile, as traders increasingly question the Federal Reserve’s independence following a dramatic political intervention in Washington.
On Tuesday, President Donald Trump announced he was removing Federal Reserve Governor Lisa Cook from her post, marking the first time in the institution’s 111-year history that a sitting president has ousted a central bank governor. The move sent shockwaves through financial markets, raising fears that the White House could seek to exert direct influence over monetary policy at a time when inflation management and rate decisions remain critical for the global economy.
Market analysts note that the removal of Cook opens the door for Trump to reshape the Fed’s decision-making. According to reports from Reuters, a vacancy on the seven-member board gives the president an opportunity to tilt the balance of power in favor of nominees aligned with his economic agenda. Trump has already advanced White House economist Stephen Miran for a temporary role set to expire in January and has floated him as a potential permanent replacement for Cook. The Wall Street Journal further reported that David Malpass, former president of the World Bank, is also being considered for the high-profile appointment.
The uncertainty comes at a delicate moment for the dollar. While resilient U.S. data has supported the greenback in recent weeks, questions over the Fed’s credibility could restrain further gains. “Markets are not just trading data anymore,” one Tokyo-based strategist remarked. “They are trading politics—and political interference in the Fed is a major red flag for investors who rely on the institution’s independence.”
Meanwhile, the Japanese yen has found some support from developments at home. Japan’s political backdrop, often a source of volatility, appears to be stabilizing following a recent surge in approval for Prime Minister Shigeru Ishiba. A Yomiuri newspaper poll published Monday showed Ishiba’s support rising 20% despite his coalition’s loss of a parliamentary majority in July. The rebound in public backing is seen as improving policy continuity at a time when the government is navigating economic reform and foreign trade negotiations.
In a sign of Japan’s ongoing economic engagement, Asahi TV reported Wednesday that Akazawa, Japan’s top trade negotiator, will return to the United States on Thursday to discuss fresh Japanese investment initiatives. The talks come amid heightened scrutiny of global trade relations and Washington’s evolving stance on Asian partnerships.
Beyond politics, traders are also bracing for key Japanese economic data later this week, with Tokyo’s Consumer Price Index (CPI) and Retail Trade figures due Friday. These releases could prove pivotal in shaping expectations for the Bank of Japan, which has been cautiously adjusting its ultra-loose monetary policy stance.
Technical Analysis
From a technical perspective, USD/JPY is showing signs of resilience. The pair managed to bounce higher in recent intraday trading, aligning with a broader bullish short-term trend. Momentum indicators, including the Relative Strength Index (RSI), suggest the currency pair has successfully worked off overbought conditions, providing scope for further gains. Moreover, the pair’s recent move above the 50-day Exponential Moving Average (EMA50) has alleviated some negative pressure, improving the prospects for an extended advance.
Key resistance lies at 148.90, a level that has acted as a significant consolidation zone in recent weeks. A decisive daily close above this threshold would invalidate the current bearish bias and shift sentiment firmly toward the upside. Should such a breakout occur, traders anticipate follow-through gains toward 149.75, with 150.20 emerging as the next major upside target.
TRADE RECOMMENDATION
BUY USDJPY
ENTRY PRICE: 148.00
STOP LOSS: 147.100
TAKE PROFIT: 150.200
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