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USD/JPY Rises Toward 156 as Japan’s Stimulus Rekindles Fiscal Fears, Intervention Watch Intensifies
Economic
Summary:
The US Dollar staged a partial rebound on Monday as USD/JPY climbed toward 155.85, supported by risk appetite and renewed pressure on the Yen amid Japan’s aggressive fiscal stimulus.
Buy
TradingUSDJPY
EXP
157.000
Entry Price
159.000
TP
155.000
SL
156.546 -0.361 -0.23%
0
Point
Flat
155.000
SL
CLOSING
157.000
Entry Price
159.000
TP
The US Dollar clawed back some of Friday’s losses on Monday, with USD/JPY trading near 155.85 at the European midday session after briefly touching a low near 156.20 at the end of last week. The recovery reflects a cautiously positive risk environment and persistent pressure on the Japanese Yen, which has weakened roughly 7% since early October amid rising concerns about Prime Minister Sanae Takaichi’s expansive fiscal agenda.
Fresh anxiety was triggered on Friday after Japan’s cabinet approved a massive ¥21 trillion (USD 135 billion) stimulus package — a scale of spending that reignited doubts about Tokyo’s already heavily indebted public finances. The news deepened structural bearishness toward the Yen, underscoring the challenge policymakers face as they attempt to balance growth support with fiscal sustainability.
Yet the Dollar’s ascent was cut short late Friday after Finance Minister Yoko Takayama delivered the clearest intervention warning of the year, arguing that “excessive volatility” and “speculative moves” in the currency market will not be tolerated. Her message followed months of verbal pressure and pushed markets to reassess the probability of direct FX intervention.
Investor attention has now shifted squarely onto the Bank of Japan, which may be preparing for potential action to stem further Yen depreciation. Historically, Japanese authorities have favored intervening during periods of thin market liquidity to maximize potential impact. The upcoming US Thanksgiving holiday, which typically dampens trading volumes, provides precisely such an environment.
Many traders remain cautious, continuing to sell the Yen but acknowledging the rising probability of a surprise intervention. The BoJ faces a delicate calculus: tolerate further Yen weakness to support inflation momentum or step in to prevent destabilizing FX dynamics that risk undermining consumer confidence.
On the US side, the Dollar remains somewhat restrained as shifting expectations around Federal Reserve policy continue to cap upside momentum. Market sentiment brightened after New York Fed President John Williams signaled that the central bank retains “room to ease” without jeopardizing progress on inflation — a comment that markets interpreted as an endorsement of additional cuts.
His remarks boosted bets for a 25 basis point rate cut in December, pressuring the Dollar on Friday. While these expectations haven’t derailed Monday’s modest rebound, they continue to provide a counterweight against more aggressive USD/JPY gains.
Technical Analysis 
From a technical perspective, USD/JPY has resumed its intraday recovery following a corrective downturn late last week. The pair is attempting to secure a higher swing low, a structure that often supports renewed bullish momentum.
Price action remains firmly above the EMA50, serving as dynamic support and aligning with the prevailing short-term uptrend. Momentum indicators, particularly relative strength oscillators, are beginning to highlight positive divergence after dipping into oversold territory on Friday. This typically signals fading bearish pressure and the potential for a fresh upside impulse.
Should USD/JPY hold above its intraday support zone, a bullish rejection from current levels could propel the pair toward the 159.50 resistance target — a level that aligns with prior rejection zones and psychological thresholds for potential BoJ intervention.
TRADE RECOMMENDATION
BUY USDJPY
ENTRY PRICE: 157.00
STOP LOSS: 155.00
TAKE PROFIT: 159.00
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