30 September 2025,05:20
Daily Market Analysis
30 September 2025, 05:20
*USD/JPY fell about 1% as U.S. government shutdown fears drove investors toward safe-haven assets.
*The September meeting summary showed broad acknowledgment of the need for future hikes, though most members favored a data-dependent approach.
*Upcoming Japanese wage and inflation data will shape BoJ’s October decision, while U.S. budget deadlock remains a key driver of near-term yen moves.
Market Summary:
The Japanese yen appreciated notably in recent trading, with USD/JPY declining approximately 1% from last Friday’s peak as risk aversion intensified amid growing concerns over a potential U.S. government shutdown. Stalled budget negotiations in Congress have raised the prospect of a federal funding lapse beginning October 1, prompting investors to seek refuge in traditional safe-haven assets, including the yen.
The currency found additional support from the recently released Bank of Japan Summary of Opinions from its September 18-19 policy meeting, which revealed heightened internal discussion regarding the timing of future rate increases. While a majority of board members acknowledged the necessity of further policy normalization, most emphasized a data-dependent approach, with only two members advocating for an immediate 25 basis-point hike. The summary noted that several policymakers view rising inflation expectations and firming wage growth as supportive of future tightening.
Market participants are now focusing on upcoming Japanese economic releases, particularly wage income data and inflation metrics, which are expected to be critical inputs for the BoJ’s October 30 policy decision. Strong readings would likely strengthen the case for earlier normalization and provide further support for the yen, while softer data could reinforce the central bank’s cautious stance.
The yen’s near-term trajectory will be influenced by both domestic policy expectations and broader risk sentiment, with the U.S. budget negotiations serving as a key external catalyst. A resolution to the fiscal impasse could temper recent safe-haven flows, while prolonged uncertainty may extend the yen’s advance.
Technical Analysis
The EUR/JPY pair has broken below its uptrend support line at 174.75, declining more than 0.3% and signaling a potential reversal of its recent bullish structure. The breakdown suggests a shift in near-term momentum, with the pair now testing a critical liquidity zone above the 174.00 level.
A sustained break below 174.00 would confirm the bearish bias and likely open the path toward the next significant support level near 173.25. The pair’s inability to maintain its position above the trendline support reflects a deterioration in technical sentiment, potentially driven by a combination of yen strength amid safe-haven flows and euro weakness against broad dollar strength.
Momentum indicators are aligning with the bearish shift. The Relative Strength Index has crossed below its midline, indicating weakening buying pressure, while the Moving Average Convergence Divergence has generated a bearish crossover—often referred to as a “death cross”—at elevated levels and is now trending toward its zero line. This configuration suggests that bullish momentum is dissipating and a potential momentum shift is underway.
Resistance Levels: 175.45, 177.80
Support Levels: 173.45, 171.50
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