Key Points:
- USD/JPY rises to 150.58 as traders digest solid U.S. data and tariff clarity.
- Japan’s ruling party says the yen’s real value should lie closer to 120–130.
The yen slipped past 150 per dollar again this week, with USD/JPY trading at 150.58 in Wednesday’s session, following a high of 150.623. The move underscores the pressure on the Japanese currency, even as senior lawmakers voice concerns over a disconnect between the yen’s current level and its real economic value.
Satsuki Katayama, who heads the Liberal Democratic Party’s finance and banking systems commission, told Reuters that the yen’s “true” value is likely between 120 and 130 per dollar, citing Japan’s economic fundamentals. Though she avoided stating an exact target level, her remarks reflect growing domestic unease as the yen remains trapped near multi-decade lows.
The recent dollar strength stems from solid U.S. economic data, including a rebound in business activity, and market optimism over a more restrained approach to U.S. trade tariffs. This has reinforced the view that the Federal Reserve will keep rates higher for longer, widening the yield gap between the U.S. and Japan.
Structural Reform, Not Intervention
Katayama acknowledged that while currency interventions can temporarily jolt markets, their impact is limited. Instead, the LDP plans to tackle the capital outflow problem structurally. A key proposal involves expanding the Nippon Individual Savings Account (NISA) programme to incentivise investment in domestic equities, particularly among older generations.
One proposed measure would exempt inherited long-held domestic stocks from inheritance tax, making Japanese equities more attractive and potentially diverting funds away from high-yielding foreign assets. The aim is to stem the outflow of household capital that has contributed to persistent yen weakness.
Technical Analysis
The USDJPY chart shows a positive trend with the pair recently breaking through key resistance levels around 150.00. The price action indicates a strong upward move, pushing above the 150.500 zone. The MACD has crossed above the signal line, and the histogram is showing increasing bullish momentum, reinforcing the case for further upside potential. The moving averages are also aligned in a bullish formation, with the price staying above the 50-period and 100-period moving averages, suggesting continued strength.
Picture: USDJPY rallies past 150.00, testing key resistance at 150.580, as seen on the VT Markets app
However, with price approaching the 150.580 resistance level, it may face some pushback before gaining further momentum. A break above this level could signal an extension of the bullish trend.
Yen Risks Persist Without Policy Shift
Until the Bank of Japan signals a more aggressive tightening path, or U.S. rate expectations ease, the yen is likely to remain under pressure. While LDP’s structural proposals may bolster the currency longer-term, FX markets remain sensitive to interest rate differentials and cross-border trade positioning.
USD/JPY could stay in a 149.90–151.00 range short-term, with upward bias intact unless fresh catalysts emerge to reverse capital flow trends.
