Published: 18 November 2025,06:08
Daily Market Analysis New
*JPY remains under pressure, weighed down by expectations of continued ultra-loose policy under PM Takaichi and renewed concerns over central bank independence.
*Geopolitical tensions rise, with Takaichi’s Taiwan-related remarks introducing a fresh risk premium and further undermining Yen sentiment.
*Focus shifts to Friday’s CPI, as Japan’s first GDP contraction in six quarters offers little support, making inflation data the next key catalyst for BoJ policy direction.
Market Summary:
The Japanese Yen continues to face substantial headwinds, though its bearish momentum has shown tentative signs of moderation over the past 24 hours. The currency remains under pressure from a confluence of fundamental factors, including market expectations for sustained ultra-loose monetary policy under the new administration and escalating regional geopolitical concerns.
The election of Prime Minister Sanae Takaichi has reinforced expectations for expansionary fiscal and monetary measures, creating persistent selling pressure on the JPY. This sentiment has been compounded by concerns over potential government influence on central bank independence. Further exacerbating the currency’s weakness, Takaichi’s recent comments regarding Taiwan have heightened Sino-Japanese tensions, introducing a geopolitical risk premium that has additionally weighed on the Yen.
Domestic economic conditions have provided little support, with Japan’s quarterly GDP recording its first contraction in six quarters—undermining the case for policy normalization and accelerating the currency’s decline.
With limited near-term catalysts, market participants are now focusing on Friday’s domestic CPI release as the next potential driver for the currency. The inflation data will be crucial in assessing the Bank of Japan’s policy trajectory and determining whether current levels represent a sustainable equilibrium for the beleaguered currency.
Technical Analysis
The Japanese Yen has sustained its weakening trajectory against the U.S. dollar, with the USDJPY pair rallying to its highest level since February and decisively breaching the 155.00 psychological level. The breakout confirms the continuation of the established bullish trend, with the pair now positioned to test the next significant resistance near the 157.95 level in subsequent sessions.
Momentum indicators reflect strong buying conviction. The Relative Strength Index (RSI) is approaching overbought territory, signaling robust upward momentum, while the Moving Average Convergence Divergence (MACD) continues to trend at elevated levels above its signal line. This configuration suggests bullish momentum remains well-supported, though the RSI’s proximity to overbought levels warrants monitoring for potential near-term consolidation.
The pair’s trajectory will be influenced by evolving expectations for Bank of Japan policy normalization and U.S. Treasury yield movements. A clean break above the 157.95 resistance would signal continuation of the broader uptrend, while any retreat should find initial support near the 154.50-155.00 former resistance zone.
Resistance level: 157.95, 161.70
Support level:154.00, 150.75
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