USDJPY outlook: Japanese yen holds strong on PM Ishiba’s resignation

[Redator]

Markets are far from straightforward, and political instability doesn’t always translate into weakness in the subject currency.

In Japan, Shigeru Ishiba’s resignation was expected since the Liberal Democratic Party he represents lost the vote in mid-July which preceded a stronger yen.

Participants are relieved from the resignation that is taking place right ahead of a no-confidence vote in Japan that would oust the Prime Minister and provoke further political unrest.

If you want to see how bad these turn out, look at France today (hosting some of the largest protests in years) after French PM Bayrou got kicked out, losing a no-confidence vote.

Ishiba aimed to pursue tariff discussions, which haven't seemed to be advancing much. However, with traders less concerned about the yen outlook and a Weaker PPI report this morning pushing the odds for a 50 bps FED cut further (still around 10% for now), expectations for the yen are rising again after a rough year.

Let's have a look at the Yen performance against the US Dollar through a multi-timeframe USD/JPY technical analysis.

Yen has by the way also strengthened quite largely against the neighbouring Canadian Dollar, I invite you to check our latest analysis of CAD/JPY right here.

Read More: Chaos in Eastern Europe – Oil (WTI) prices lagging the move?

USDJPY Multi-timeframe analysis

USDJPY Daily timeframe

USDJPY Daily Chart, September 10, 2025 – Source: TradingView

Markets are awaiting for not only next Wednesday's FOMC meeting, but also the following Bank of Japan's meeting the next day.

With BoJ Speakers repeating that the path forward is more towards hikes, rate differencials between the US and Japan are projected to converge, particularly amid the upbeat Japanese growth and inflation.

After retesting the high 150.00 Monthly pivot zone and consequently rejecting it, the price action has been stuck in a limbo between 147.00 to 148.50.

FX is trying to pick it up more in the previous days, but looking out, there is a certain lack of direction in the pair – Let's try to see if shorter timeframe allow to shift the outlook ahead of tomorrow's US CPI release.

USDJPY 4H timeframe

USDJPY 4H Chart, September 10, 2025 – Source: TradingView

Looking closer, the week opened with a gap higher within thin-volume trading before seeing a sharp downward reversal.

Tomorrow's price action will be decisive, but amid the current strong range, traders are holding prices right in the middle pivot zone.

A failure to break the 148.100 highs of that pivot zone will give more technical edge to the sellers.

This will have to be confirmed through tomorrow's CPI report, with any move until then likely to be faded or lack much continuation.\

Levels to keep watch for USD/JPY trading:

Resistance Levels

• Pivot at the 148.00 zone +/- 100 pips (immediate resistance combined with MA 50 and 200)
• May range extremes from 148.70 to 149.50
• 150.00 psychological resistance
• 150.90 July highs

Support Levels

• 146.50 range support
• 145.00 psychological support
• 142.35 low of the May range, main support

USDJPY 1H timeframe

USDJPY 1H Chart, September 10, 2025 – Source: TradingView

As seen on the 4H timeframe, the price action has mean-reverted the lows attained in yesterday's session due to some mean-reversion US Dollar buying as can be explored in our latest US Dollar analysis.

However, a short-timeframe downward channel is developping (despite the few cracks below) and shows that bear momentum currently holds the upper hand.

Do not forget that tomorrow's CPI may change everything to the current trend, particularly is the report does come in much stronger : expected at 0.3%, anything above 0.5% will change the theme considerably.

Safe Trades!

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