The Japanese Yen (JPY) retreated slightly from an over one-week high against the US Dollar (USD) during the Asian session on Friday, following the disappointing release of Japan’s household spending data. Weaker consumer spending could cool demand-driven inflation and allow the Bank of Japan (BoJ) to delay further interest rate hikes, especially considering Japan’s new Prime Minister Sanae Takaichi’s pro-stimulus stance. This scenario has prompted some JPY selling, helping the USD/JPY pair climb back above the 153.00 round-figure mark.
Meanwhile, minutes from the BoJ’s September policy meeting, released on Wednesday, kept hopes alive for an imminent rate hike. Additionally, speculation that Japanese authorities might intervene to curb further weakness in the domestic currency has restrained aggressive bearish bets against the yen.
On the US side, the dollar remains on the defensive amid worries that a prolonged government shutdown could negatively affect economic performance. These concerns are likely to limit any meaningful appreciation in the USD/JPY pair.
### Japanese Yen Edges Lower on Weaker Domestic Data and BoJ Uncertainty
Data released earlier on Friday showed that Japan’s household spending rose 1.8% year-on-year in September, falling short of the 2.5% expected and down from 2.3% growth recorded in August. On a seasonally adjusted month-on-month basis, spending actually fell by 0.7%, signaling signs of cooling private consumption.
Japan’s new Prime Minister Sanae Takaichi is reportedly looking to finalize an economic stimulus package of around $65 billion by late November to address inflation and support growth. A supplementary budget to fund this package is also in the pipeline.
Meanwhile, the BoJ remains cautious about further rate hikes. Minutes from the September 18-19 meeting highlighted a tentative approach as policymakers weighed inflation dynamics against trade risks. However, board members noted that the central bank could return to a rate-hiking stance, given that the BoJ’s 2% price stability target has largely been achieved.
Market analyst Mimura observed that JPY long positions have been shrinking amid speculations around Japan’s macroeconomic and fiscal policies.
### US Dollar Consolidates Amid Government Shutdown Concerns
The US dollar is consolidating previous losses, as concerns over economic risks from a prolonged government shutdown keep bullish momentum in check. With no immediate resolution in sight—especially after Democrats signaled their intent to block GOP plans for a vote on Friday—traders have scaled back expectations for further Federal Reserve easing.
Currently, there is about a 69% chance of a Fed rate cut in December, following hawkish remarks from several influential FOMC members. This sentiment limits USD downside and attracts dip-buyers in the USD/JPY pair.
Traders now await the preliminary release of the University of Michigan’s US Consumer Sentiment Index. The ongoing government shutdown has caused a blackout of official economic data, making this report and upcoming Fed commentary pivotal for short-term trading opportunities heading into the weekend.
### Technical Outlook: USD/JPY Faces Vulnerability After Repeated Failures Near 154.45 Supply Zone
Recent repeated failures around the mid-154.00s, along with the overnight breakdown below the 153.30–153.25 support-turned-resistance zone, suggest potential further depreciation for the USD/JPY pair.
However, positive momentum indicators on the daily chart imply that any additional decline would likely find solid support near the 152.15–152.10 region. A decisive break below the 152.00 mark could trigger fresh bearish momentum, extending the recent pullback from the highest levels since February, touched earlier this week.
On the upside, a recovery above the 153.25–153.30 horizontal resistance may encounter a hurdle near 153.65. Sustained strength beyond this level would likely enable the USD/JPY pair to reclaim the 154.00 mark and push higher toward retesting the 154.45 supply zone.
This 154.45 area stands as a critical resistance point; a convincing break above it could see the pair climb toward the 155.00 psychological level and eventually challenge the 155.60–155.65 barrier and the 156.00 round figure.
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**Summary:** The Japanese yen has weakened slightly following softer-than-expected household spending data, while the Bank of Japan’s cautious stance and government stimulus plans add to the currency’s uncertainty. The US dollar remains pressured due to shutdown concerns and tempered Fed expectations. Technically, the USD/JPY pair faces resistance near 154.45, with downside support around 152.10. Traders should watch upcoming economic data and central bank cues for further directional clues.
https://bitcoinethereumnews.com/finance/japanese-yen-retreats-as-weak-data-adds-to-boj-uncertainty/
