Despite the lack of US data on Friday, excluding Non-Farm Payrolls from market participants’ models, the US dollar is strengthening to start the week. This comes at the particular cost of the yen, with the latest elections welcoming another round of stimulus for Japan.
The Japanese yen had been appreciating intensely from the polls relating to the freshly concluded LDP elections.
Japan’s political landscape shifted dramatically as Takaichi Sanae won the Liberal Democratic Party (LDP) leadership election on Saturday, securing her place as the likely next Prime Minister.
For context, the LDP party has ruled Japan since the end of World War II, and the newly elected Takaichi promises to make some changes in the party.
The market’s immediate reaction was sudden: a sharp depreciation of the Japanese Yen (JPY), as her conservative platform and preference for loose fiscal and monetary policies were not fully priced in. This led to a 1.60% rise at the weekly open.
Takaichi, a protégé of former Prime Minister Shinzo Abe, advocates for aggressive public spending and a return to Abenomics.
This accommodative stance hurt the yen, which was also driven by her firm position on immigration and plans for corporate tax cuts.
This political premium on yen weakness has propelled the USD/JPY pair to levels not seen since the first week of August, testing psychological resistance around the 150.00 mark.
Let’s dive into the chart of the week.
USDJPY 8H chart, October 6, 2025 – Source: TradingView. Past performance is not indicative of future results.
USDJPY gapped up sharply at the weekly currency market open, taking the pair from the 147.00 handle to just below 150.00.
The pair is for now contained within the range established since mid-July with mean-reversion traders trying to reject the daily highs.
Reactions and session closes will have to be tracked closely:
A strong close above the resistance could point to a breakout.
On the other hand, failing to breach the upper resistance level would allow for the range-bound action to hold.
Resistance levels
- 150.00 to 150.50 resistance
- July 31 highs 150.92
- 151.00 to 152.00 key resistance
Support levels
- 147.80 to 148.00 pivot and key moving averages (50 and 200)
- 146.00 range support
Read our latest blog: “Learn more about the economic calendar and why it is important for forex traders”
For the latest market-related insights, visit OANDA’s Trade Tap blog.
Disclaimer
This article is for general information purposes only, not to be considered a recommendation or financial advice. Past performance is not indicative of future results. It is not investment advice or a solution to buy or sell instruments.
Opinions are the authors; not necessarily those of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors.
Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and is not suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Trading through an online platform carries additional risks. Losses can exceed deposits.
