✅ Dollar Weakness Persists — Focus Turns to Sustainability of USD/JPY Below 150
💹 This Week’s FX Market: Dollar Selling Dominates, Political Risks Weigh
The foreign exchange market this week has been led by broad-based dollar selling.
USD/JPY fell to around ¥150.50 in Tokyo trading, marking a sharp reversal of the so-called “Takaichi Trade” that had driven yen weakness in prior weeks.
Following the collapse of Japan’s LDP–Komeito coalition, Prime Minister Sanae Takaichi has sought talks with opposition parties, but deep policy divides have hindered progress.
Even the recent meeting with the Japan Innovation Party (Ishin) failed to yield agreement, with disputes over corporate donation bans among key sticking points.
As a result, political uncertainty remains elevated, keeping markets sensitive to unexpected headlines.
🇺🇸 U.S.: Trade Tensions and Trump’s Comments Weigh on the Dollar
In the U.S., President Donald Trump has turned attention back to trade issues after calm in the Middle East, hinting at potential new tariffs on China.
Although he later suggested a pause in implementation, the lack of policy consistency has capped the dollar’s upside.
Further downward pressure stems from:
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The prolonged Ukraine conflict
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Rising energy cost risks tied to tighter sanctions on Russia
Together, these factors have fueled risk-averse dollar selling.
💴 USD/JPY: Battle for 150 — Political and Yield Forces Intertwined
After surging from ¥147 to ¥152 last week, USD/JPY has turned lower, with politics and U.S. yields now in conflict.
The key focus is whether the pair can sustain a break below 150.
During the London session, USD/JPY temporarily rebounded to ¥151.38 on reports that LDP–Ishin policy talks had made progress.
However, the lack of actual agreement saw gains fade quickly — a short-covering rally rather than trend reversal.
📈 Major Currency Moves (London Session)
| Pair | Latest | Comment |
|---|---|---|
| USD/JPY | 151.16 | Selling pressure dominates; 150 remains key battleground |
| EUR/JPY | 176.18 | Euro soft; yen strength broadening |
| GBP/JPY | 203.06 | Pound rebound limited in scope |
🏦 Upcoming Data & Key Events (Tonight)
Economic Indicators
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🇪🇺 Eurozone Trade Balance (Aug)
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🇨🇦 Canada Housing Starts (Sep)
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🇺🇸 Philadelphia Fed Index (Oct) → Forecast: 10.0 (Prev. 23.2)
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🇺🇸 NAHB Housing Market Index (Oct)
Central Bank Speakers
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🇺🇸 Fed: Waller, Mullan, Barr, Bowman, Kashkari
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🇪🇺 ECB: Lagarde, Lane, Holzmann
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🇬🇧 BOE: Mann, Lean
Multiple Fed officials are scheduled to speak, marking a pivotal juncture that could determine whether dollar weakness pauses or deepens.
🇨🇳 China: Softer Tone on Rare Earth Exports, Calming Trade Tensions
The Chinese Ministry of Commerce issued statements clarifying that:
“Export controls on rare earths do not constitute a ban,”
“We hope the U.S. recognizes progress in past negotiations and corrects its mistakes.”
This tempered rhetoric eased fears of an escalating U.S.–China trade confrontation, supporting Asian equities and improving risk sentiment during the session.
✅ Summary: Dollar Weakness Continues, 150 Yen Line Key Pivot
The current wave of dollar selling is being driven primarily by political instability and trade friction.
The ¥150 level in USD/JPY remains a critical dividing line — sustained breaks could trigger further downside.
With multiple Fed speeches and U.S. activity data due tonight, markets face a binary setup:
either a temporary rebound in the dollar,
or a continuation of the downtrend if dovish signals prevail.
In the near term, traders should stay alert to volatility spikes as both political headlines and policy signals continue to dictate sentiment heading into the week’s close.
