The USD/JPY pair remained subdued around 153.50 during Asian trading on Wednesday, marking its second consecutive day of decline as investors sought refuge in the Japanese Yen amid a broader selloff in global equities. Heightened concerns over inflated valuations in AI-driven stocks and warnings from major Wall Street bank executives spurred renewed safe-haven demand for the Yen.
Japan’s Finance Minister Satsuki Katayama reiterated that authorities are “closely monitoring” foreign exchange volatility and stand ready to act against excessive, one-sided movements. Meanwhile, Prime Minister Sanae Takaichi emphasized that Japan has yet to achieve sustainable inflation supported by wage growth, suggesting that the Bank of Japan will likely maintain a cautious monetary stance for now.
These official remarks have bolstered sentiment toward the Yen, reinforcing its position as a preferred asset during periods of heightened uncertainty.
Technical Outlook: Support at 153.25 Key
From a technical standpoint, USD/JPY continues to trade near key resistance and support zones following last week’s breakout above 153.25–153.30 and a temporary rise beyond the 154.00 mark. Despite the pullback, oscillators on the daily chart remain in positive territory, signaling potential for another upward leg if sentiment stabilizes.
Key technical levels to watch include:
- Resistance: 154.75–154.80 (intermediate hurdle), followed by 155.00 (psychological level)
- Support: 153.65 (recent swing low), 153.25 (resistance-turned-support), and 153.00 (critical floor)
- Downside risk: A decisive break below 153.00 could expose 152.15, with further selling dragging prices toward 151.55–151.00
Any sustained rebound above 154.75 may revive bullish momentum toward the 155.00 handle, while a close below 152.00 would invalidate the short-term positive bias.
Dollar Weakens on U.S. Political Uncertainty
The U.S. Dollar Index (DXY) weakened slightly after five days of gains, pressured by ongoing political gridlock in Washington. The U.S. government shutdown, now in its sixth week, threatens to become the longest funding lapse in U.S. history after the Senate again rejected a short-term spending bill on Tuesday—the 14th failed attempt to resolve the standoff.
Investors are now turning their focus to the Federal Reserve’s December policy outlook. Fed Chair Jerome Powell recently hinted that another rate cut remains uncertain, emphasizing a data-dependent approach until official economic releases resume.
The combination of U.S. fiscal uncertainty, risk-off sentiment, and a firmer Yen suggests that USD/JPY could remain range-bound in the short term, with volatility likely to rise as investors await fresh economic and policy signals.
