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The Japanese Yen (JPY) remains on the defensive against a bullish US Dollar (USD) at the start of a new week and is currently placed near its lowest level since February 14, touched last Thursday. Traders remain uncertain about the timing of the next rate hike by the Bank of Japan (BoJ) amid speculations that Japan’s new Prime Minister Sanae Takaichi will pursue aggressive fiscal spending plans and resist policy tightening. This, to a larger extent, overshadows strong consumer inflation figures from Tokyo – Japan’s capital city – released on Friday and continues to weigh on the JPY. Moreover, the upbeat mood across the global financial markets is seen undermining the JPY’s safe-haven status. The USD, on the other hand, stands firm near its highest level since early August and seems poised to climb further on the back of the US Federal Reserve’s (Fed) hawkish tilt. This further lends support to the USD/JPY pair and backs the case for additional near-term gains. However, concerns about economic risks stemming from a prolonged US government shutdown and speculations that Japanese authorities could intervene to stem further JPY weakness might cap the currency pair. Japanese Yen bears retain control as hopes for fiscal stimulus continue to fuel BoJ uncertainty The Bank of Japan held rates steady last Thursday despite two dissenting votes, with board members Naoki Tamura and Hajime Takata pushing for a hike to 0.75%. In the post-meeting press conference, BoJ Governor Kazuo Ueda said that there are no preset ideas about the timing of the next rate hike. Moreover, Japan’s new Prime Minister, Sanae Takaichi, has a pro-stimulus stance, advocating for significant fiscal spending to tackle inflation and boost the economy. This reaffirms expectations that the BoJ could delay raising interest rates further and continues to undermine the Japanese Yen on…

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Filed under: News - @ November 3, 2025 3:22 am