USDJPY rises despite Japanese government’s stimulus measures

The USDJPY rate is strengthening, regaining lost ground since the morning. Discover more in our analysis for 25 November 2024.

USDJPY forecast: key trading points

• BoJ Governor Kazuo Ueda suggests a potential December rate hike to address the yen’s weakness
• The Japanese government has approved a 21.9 trillion JPY stimulus package to support the economy
• USDJPY forecast for 25 November 2024: 153.00

Fundamental analysis

The USDJPY rate strengthened after rebounding from the 153.75 support level, but the US dollar remains under pressure. Investors reacted negatively to Scott Bessent’s appointment as Treasury Secretary. The markets expect Bessent to focus on maintaining economic and market stability, which could reduce interest in so-called Trump trading.

Japanese investors await Tokyo inflation data, a leading indicator of nationwide price trends. Last week's mixed economic data provided little clarity on the future direction of monetary policy. BoJ Governor Kazuo Ueda has suggested a possible interest rate hike as early as December, citing concerns about the yen’s weakness.

Meanwhile, Prime Minister Shigeru Ishiba’s administration has endorsed a 21.9 trillion JPY stimulus package to support households and businesses. He stated that his priorities were eliminating deflation, increasing wages, and stimulating economic growth. According to today’s USDJPY forecast, these measures may support the Japanese yen, reinforcing market expectations about long-term economic stability in Japan.

USDJPY technical analysis

The USDJPY H4 chart indicates that the market has formed a narrow consolidation range around the 154.45 level and broken through its lower boundary. A downward wave is expected to extend towards 153.00 (testing from above) today, 25 November 2024. The entire downward structure is considered a correction of the previous growth wave. After reaching this level, the price could return to 154.45. Further growth and a breakout above the 155.00 level will open the potential for an upward move to 156.20 and possibly towards 157.60, the main target.

The Elliott Wave structure and growth wave matrix, with a pivot at 153.00, technically support this scenario for the USDJPY rate. The market is forming a downward wave towards this level, which coincides with the lower boundary of a price envelope. Once the price reaches this level, a growth wave targeting the envelope’s upper boundary at 156.20 will follow.

Summary

Although the USDJPY rate has risen slightly, the US dollar remains under pressure amid expectations of greater stability in US policy. The approved stimulus package and Prime Minister Ishiba’s intention to fight deflation may strengthen the Japanese yen. Technical indicators for today’s USDJPY forecast suggest that a correction could continue towards the 153.00 level.