• USD/JPY moved higher on Wednesday as worries about Japan’s fiscal position and political uncertainty outweighed expectations of tighter BoJ policy.
• The possibility of coordinated U.S.-Japan action has eased pressure on the yen, but its direction remains uncertain as Japan heads into weekend elections.
• Prime Minister Sanae Takaichi is campaigning in the national election on plans for increased spending, tax reductions, and a new security strategy that would speed up Japan’s defence expansion.
•Takaichi triggered a yen selloff this week following campaign remarks that boosted expectations of policy easing. Despite later clarifications, fears remain that mixed signals may hinder efforts to stabilise the currency.
• Immediate resistance is located at 156.57(38.2%fib), any close above will push the pair towards 157.00 (Psychological level).
• Support is seen at 155.69(Daily low) and break below could take the pair towards 154.36 (50%fib)
Recommendation: Good to buy around 156.20, with stop loss of 154.50 and target price of 157.00
