8 September 2025,03:51
Daily Market Analysis
8 September 2025, 03:51
*The yen slumped as Ishiba’s resignation fueled political uncertainty and revived fears of a return to aggressive fiscal stimulus.
*JGB yields spiked, with the 30-year hitting a record 3.285%, reflecting concerns over Japan’s unsustainable debt path near 250% of GDP.
*Stronger Q2 GDP revisions offered little comfort, with markets focused on leadership succession and the risk of delayed BOJ tightening.
The yen was the session’s biggest loser, with USD/JPY surging toward 148.30 after Prime Minister Shigeru Ishiba announced his resignation over the weekend. This move plunges Japanese politics into uncertainty and raises the prospect of a return to the unchecked fiscal stimulus of the “Abenomics” era.
Ishiba was one of the few advocates of fiscal restraint in a country with a debt-to-GDP ratio nearing 250%. Markets fear a return to Abenomics-style stimulus, with potential successors like Takaichi seen pushing for aggressive spending while keeping pressure on the BOJ to cap rates.As a result, Japanese Government Bond (JGB) yields soared, with the 30-year yield hitting a record high of 3.285%. This sell-off reflects fears that Japan’s debt trajectory is becoming unsustainable.
Although revised Q2 GDP data beat expectations showing 2.2% annualized growth which the figures are largely backward-looking. The future now depends on who succeeds Ishiba. Any leader perceived as favoring massive stimulus could further weaken the yen, potentially pushing USD/JPY toward the 150 level and delaying the next BOJ rate hike indefinitely.
The yen’s safe-haven appeal has been eclipsed by domestic vulnerabilities, leaving it hostage to leadership uncertainty and policy direction. Until clarity emerges, volatility will remain elevated, with risks skewed toward USD/JPY testing the 150 level if markets anticipate prolonged stimulus and delayed BOJ tightening.
USD/JPY has climbed back above the 148.30 level after recovering sharply from last week’s dip toward 146.65, where buyers stepped in to defend a key floor. The rebound has carried price back into the heart of its multi-week consolidation range, with resistance seen at 149.50 and stronger supply likely to emerge around the 150.90 handle.
Momentum signals lean constructive but remain short of fully confirming bullish dominance. The Relative Strength Index has bounced to 55, suggesting improving momentum after its recent dip but leaving scope for further upside before testing overbought levels. Meanwhile, the MACD has turned marginally positive, with early signs of a crossover developing, hinting at a potential shift toward renewed upside traction.
For now, the pair remains range-bound between 146.65 and 149.50, with traders watching closely to see if the latest rebound can gather enough strength for a breakout. Sustained closes above 148.50 would reinforce a bullish bias, while a slip back below 147.70 could tilt the balance back in favor of sellers.
Resistance levels: 149.50, 150.90
Support levels: 148.00, 146.65
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