Japanese Yen sticks to negative bias, lacks follow-through amid hawkish BoJ outlook

💡 DMK Insight

The JPY’s weakness reflects deeper fiscal concerns, and here’s why that matters now: With Prime Minister Takaichi’s spending and tax cuts, traders are right to worry about Japan’s fiscal sustainability. This could lead to further yen depreciation, especially if the Bank of Japan maintains its ultra-loose monetary policy. A weaker yen often boosts exports, but it also raises import costs, creating inflationary pressures that could complicate the economic landscape. Watch for key support levels around recent lows; a break could trigger more selling. On the flip side, if the government can stimulate growth effectively, we might see a rebound. But for now, the market’s skepticism is palpable. Keep an eye on U.S. dollar strength as well, since any uptick there could exacerbate JPY’s decline. Monitor the 145 level closely; if it breaks, we could see a swift move towards 150. This is a critical juncture for JPY traders, and positioning ahead of any economic data releases will be key.