USD/JPY Edges Higher to 157.90 as Takaichi’s Fiscal Plans and BoJ Keep Rate Hike Prospect Alive

USD/JPY edged higher to 157.90 on Tuesday as markets weigh Prime Minister Sanae Takaichi's stimulative fiscal stance against the Bank of Japan's growing inflation concerns. The yen stays in a narrow range while traders await a run of Japanese economic data this week.

Takaichi pledges tax cut without new bonds

USD/JPY edged higher to 157.90 on Tuesday, with the yen holding within a narrow range. Markets are assessing the direction of Takaichi's government, which continues to pursue stimulative fiscal policy despite concerns over the weak yen and the funding of government spending.

In a speech to parliament, Takaichi pledged to cut the consumption tax on food. At the same time, she stressed that the government would seek to finance its spending without issuing additional bonds. This should ease some market concern over rising public debt and yields.

Investors await wage and spending data

This week, investors are awaiting several key reports from Japan: August wage data, the current account and household spending, as well as September indicators of consumer confidence and machine tool orders.

Attention is also focused on the Bank of Japan. The summary of opinions from its September meeting reflected growing concern that inflation could remain above the 2% target for longer. This keeps the prospect of another rate hike before year-end alive, although the timing of the next move ahead of the October and December meetings remains unclear.

Technical picture points to 158.77

USD/JPY maintains a short-term upward structure but trades within a narrowing range. On the four-hour chart, following a recovery from the 156.50 area, the pair settled above 157.54 and formed a consolidation range around 157.86–157.96. The main scenario envisages a further rise toward resistance at 158.77, with a break above that level opening the way toward 159.36.

The price remains above the ascending support line, while further gains are capped by the descending boundary of the local structure, forming a triangle with gradually rising lows. The MACD histogram retains slight positive momentum, supporting the bullish scenario. A move below 157.54 would weaken that scenario and increase the likelihood of a return toward 156.50.

On the one-hour chart, the pair also consolidates around 157.96, and the Stochastic oscillator has risen above 80, confirming buying momentum. As long as price holds above 157.80, the priority stays a move toward 158.77, followed by a correction toward 157.96.

Source: ActionForex

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