• USD/JPY dipped below 154 level on Wednesday as the yen firmed as investors viewed Prime Minister Takaichi’s election victory as a boost for fiscal discipline.
• After a decisive election win, Takaichi gained a strong mandate for higher spending and tax cuts, reaffirming her plan to suspend the 8% food sales tax for two years.
• Investors so far believe her policies won’t significantly impact Japan’s fiscal health, lifting equities and the yen and steadying government bonds.
• The yen was also supported by concers that Japanese authorities might intervene to curb speculative FX selling in foreign exchange market.
• Immediate resistance is located at 154.45(Daily high), any close above will push the pair towards 155.00 (Psychological level).
• Support is seen at 153.25(50%fib) and break below could take the pair towards 152.12 (Lower BB)
Recommendation: Good to sell around 153.60, with stop loss of 154.50 and target price of 153.00
