USD/JPY Price Forecast - Dollar to Yen Steadies Above 153.00 as Yen Faces Political Upheaval

USD/JPY rips to multi-month highs, then cools: policy divergence meets politics at 153.0–155.0

Verbal jawboning vs. hard levels: where the bids and the brakes sit for USD/JPY

USD/JPY punched through 151.00 this week, closed above 153.00, and briefly tagged fresh eight-month highs after peaking at levels last seen on February 13. The pair then eased as Japan’s Finance Minister Katsunobu Kato warned against “excessive” FX moves. Price now pivots around 153.00 with first support stacked at 152.60–152.55 and the psychological 152.00. Momentum remains USD-positive while spot holds above that 152.00 break point; a close back below 152.00 would open 151.00 and the post-gap magnet toward 150.00, with a deeper hole to fill near 147.50 if risk aversion flips to outright liquidation. On the topside, layered offers sit near 153.70–153.75, then 154.00, with acceleration risk toward 154.70–154.80 (February 11 swing high) and the round 155.00 if those give way.

Macro fuel: why USD/JPY still trends higher even as RSI flashes ‘hot’

The bull case is simple math. The US Dollar Index (DXY) set a fresh two-month high as haven demand built around Japan and France, and despite traders still penciling in two Fed cuts before year-end. Meanwhile, Japan’s inflation has run at or above the Bank of Japan’s 2% target for more than three years, growth logged a fifth straight quarter in Q2, and yet the BoJ’s policy rate remains barely positive. That rate gap continues to tax the Yen, so momentum buyers keep leaning long USD/JPY on dips. Technically, the daily RSI is stretched, so near-term pullbacks are probable rather than fatal to trend. The four-hour 20-period moving average near 152.20 is the first test; a hold there would tell you the grind higher is intact.

Politics is a catalyst, not a cure: what Komeito’s exit and Takaichi’s win mean for USD/JPY

Two headlines mattered for Yen traders. First, NHK reported Komeito will quit the LDP-led coalition, injecting fresh uncertainty into the handover to LDP chief Sanae Takaichi. Second, Takaichi’s platform implies aggressive fiscal outlays in the Abe tradition. Bigger deficits and delayed BoJ normalization are Yen-negative in isolation. Her advisors have floated tolerance for a BoJ hike in December or January, but markets hear “later, not now,” which sustains USD/JPY strength. The wrinkle is that Takaichi also said she does not want an “excessively” weak currency, which invites faster jawboning if spot sprints toward 155.00 and beyond.

BoJ path: one hike in sight, not a hiking cycle

Producer Prices rose 0.3% m/m in September after a 0.2% drop in August, a modest push toward pass-through and a case for a December tweak. Average cash earnings growth slowed to 1.5% y/y from 3.4%, keeping the BoJ cautious about declaring victory on wages. Private consumption is ~55% of GDP; without broader wage momentum, the BoJ is more likely to move once and pause. That keeps rate differentials wide and Yen rallies shallow unless accompanied by official action.

Washington watch: shutdown optics, Michigan sentiment, and Fed speakers set the tape

Even with a government shutdown extending into a second week, USD strength persisted. The University of Michigan Consumer Sentiment printed 55.0 versus a 54.2 consensus and 55.1 prior—hardly a collapse—while 1-year inflation expectations eased to 4.6% from 4.7% and 5-year held at 3.7%. That mix doesn’t force an urgent Fed pivot. Speeches from FOMC members (Daly, Musalem) matter at the margin; anything that leans less dovish than markets expect would re-steepen rate spreads and support a retest of 154.00–155.00 in USD/JPY.

Intervention risk: where the Ministry of Finance’s line likely sits

Kato’s comments capped intraday momentum and helped drag spot off its highs, but the market’s working assumption is that verbal intervention begins in the low-to-mid 150s and hard action risks rise if disorderly trade drives USD/JPY toward 158–160. Historically, Japan prefers to lean against vertical price action, not trend per se. For traders, that means respecting intraday reversal risk above 154.00, tightening risk on longs into spikes, and being ready for fast 1–2 yen snaps if headlines hit.

Positioning proxy: how to think about ‘insiders’ in a market without insiders

There are no “insider transactions” in USD/JPY. The closest read-through is speculative futures positioning and custody flows. Elevated net-long USD/JPY positioning on the futures side raises shakeout risk on any intervention headlines, while bank custody data often shows month-end rebalancing demand for Yen. In practice: watch the tenor of client flow around Tokyo fix and London close, and keep an eye on the CFTC’s yen net positioning as a proxy for one-sidedness.

Short-term trading map for USD/JPY: levels, triggers, invalidations

Into New York, USD/JPY trades with the trend as long as price is supported above 152.60–152.55. Momentum continuation above 153.70–153.75 unlocks 154.00 and then 154.70–154.80; a daily close above 154.80 would embolden trend followers to press toward 155.00. Fade set-ups require intraday exhaustion and a push back below 152.60; a four-hour close under 152.00 would shift focus to 151.00 and the 150.00 congestion band. Only a decisive break sub-150.00 neutralizes the medium-term uptrend and reopens the 147.50 gap.

Event-path scenarios: what moves the next two big figures

A firmer Michigan read coupled with steadier risk sentiment favors a grind to 154.00–154.80. A soft US read with dovish Fed rhetoric and stronger BoJ-leaning headlines argues for 152.00 retests and perhaps 151.00. Political noise in Tokyo can cut both ways; if coalition chatter turns messy, USD/JPY can rise on uncertainty, but the same headlines can turbocharge intervention risk. The market will trade that contradiction in real time.