USD/JPY Price Forecast - Yen Climbs Toward $155.65 as Japan’s Weak GDP Fuel Dollar Strength

USD/JPY Surges As Japan’s Economy Shrinks 0.4 Percent And Rate-Hike Bets Collapse

USD/JPY opens near $154.90 as Japan’s Q3 GDP contracts 0.4 percent after last quarter’s 0.6 percent expansion, pulling the annual figure to a sharp 1.8 percent decline. The yen immediately weakened with USD/JPY jumping from $154.56 to $154.63 after the GDP print, a sign traders were ready to buy any dip into the nine-month high at $155.044. The soft 0.1 percent private consumption reading, down from 0.4 percent last quarter, shows rising import costs are grinding household spending lower. With external demand falling 0.2 percent and Japan’s export-reliant economy exposed through a trade-to-GDP ratio above 45 percent, the yen enters the week with structural weakness that keeps USD/JPY supported near the upper edge of the intervention zone.

USD/JPY Gains Momentum As Political Pressure Locks The BoJ Into Ultra-Loose Policy

Prime Minister Sanae Takaichi’s fiscal expansion push reinforces the expectation that the BoJ cannot tighten into a shrinking economy. Her administration’s new stimulus program and resistance to rate hikes gives USD/JPY a clear policy divergence tailwind. Since Takaichi won the LDP election, USD/JPY has surged 3.4 percent to $154.52 as intervention threats from Finance Minister Katayama slowed the pace but failed to reverse the trend. Japan’s import-price surge highlights the inflation risk from a weak currency, yet policymakers prefer fiscal spending over policy tightening. This adds another layer of upside reinforcement for USD/JPY as traders treat verbal warnings as short-lived barriers rather than trend reversers.

USD/JPY Holds Near Nine-Month Highs As Fed Cut Expectations Fade

USD/JPY remains above $154.45–$154.50 as US rate expectations shift. Markets now price only three Fed cuts through next year, down from more than four, after a coordinated wave of hawkish FOMC commentary pushed back on a December cut. This supports the US Dollar broadly and stabilizes USD/JPY ahead of delayed US macro releases. Traders remain cautious about shorting the dollar before payrolls and FOMC minutes hit the calendar this week. With the dollar strengthened by reduced cut odds and Japanese data weakening simultaneously, the policy gap broadens and keeps USD/JPY pressing toward $155.00.

USD/JPY Breaks Away From Yield Correlations As Data Drought Ends

The typical correlation between USD/JPY and US yields broke down due to a multiweek freeze in US government data. With no fresh macro signals, USD/JPY traded independently from the US 2-year and 10-year yields. Nasdaq futures, VIX levels, and Japanese yields all showed weak correlation as well. This week marks the return of US data with the delayed September nonfarm payrolls arriving Thursday. The prior trend showed weakening payrolls, which triggered Fed cuts in September and October. If payrolls print soft, markets may rebuild rate-cut expectations, putting temporary pressure on USD/JPY. But strong payrolls or firm wage growth would reinforce the dollar side of the spread and push USD/JPY beyond $155.05.

Nvidia Earnings Become A New Driver As Carry Trades Lean On US Tech Sentiment

USD/JPY traders now treat Nvidia’s earnings as a macro event. Nvidia’s influence on US indices affects appetite for yen-funded carry trades. The company rarely misses on revenue or guidance, particularly during the AI boom. A beat combined with a strong stock reaction fuels risk appetite and accelerates USD/JPY toward $155.65 and potentially $156.00. But if Nvidia beats estimates yet fails to rally, traders will read it as exhaustion in the AI trade. A risk-off shift would trigger temporary yen strength and weigh on USD/JPY, especially if combined with weak payrolls later in the week.

USD/JPY Technical Setup Shows An Ending Wedge With Bullish Structure But Fading Momentum

USD/JPY trades inside a tightening ending wedge after rallying roughly 5.5 percent since April. Momentum indicators show stress: RSI prints bearish divergence while MACD crosses its signal line and rolls over. Yet price action stays bullish above $153.60. Resistance stands at $155.00 followed by the wedge top at $155.15 and the Fibonacci 127.2 percent extension at $155.65. A break clears the path to $156.00. On the downside, trendline support at $154.00 and the $153.65 zone remain critical. A fall through $153.00 exposes deeper support at $152.85 and potentially $151.60. The wedge warns upside progress may be slower but still structurally favored.

USD/JPY Faces Intervention Threats But Market Treats Them As Temporary Roadblocks

Japanese authorities continue warning about yen weakness. Finance Minister Katayama vows to watch FX with urgency, while Economy Minister Kiuchi highlights import-cost inflation risk. These warnings slowed USD/JPY briefly but failed to reverse momentum. Traders recall past interventions losing impact when not backed by real policy adjustments. With Japan’s GDP shrinking, consumption softening, geopolitical pressure with China rising, and Takaichi pushing for more spending, real tightening remains unlikely. Intervention risk therefore acts as friction, not a reversal catalyst.

USD/JPY Final Verdict

BUY
The macro divergence, shrinking Japanese GDP, collapsing consumption, rising import inflation, fiscal expansion in Tokyo, and fading Fed cut expectations all align to support USD/JPY upside. As long as USD/JPY holds above $153.60, the path favors another test of $155.15 → $155.65 → $156.00.

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