Japan’s Takaichi outlines fiscal shift, food tax suspension plan

💡 DMK Insight

Japan’s push for a proactive fiscal stance could shake up the yen and related markets. A temporary suspension of the sales tax on food signals a shift towards stimulating consumer spending, which might boost economic activity in the short term. For traders, this could mean increased volatility in the forex market, particularly for USD/JPY. If the yen weakens as a result, it could open up opportunities for long positions in USD/JPY, especially if it breaks above recent resistance levels. Keep an eye on the 150-day moving average as a potential pivot point. But here’s the flip side: if this policy leads to inflationary pressures, the Bank of Japan might have to reconsider its ultra-loose monetary policy sooner than expected. That could create a scenario where the yen strengthens unexpectedly, catching traders off guard. Watch for any comments from BOJ officials in the coming days that could signal a shift in their stance. Overall, this development is worth monitoring closely as it unfolds.