USD/JPY Rises to 153.70, Yen Weakens
USD/JPY strengthened and held above the key support area of 152.00, with the price moving up to around 153.70 during Wednesday's European session. The pair's rise occurred as the Japanese yen weakened against most major currencies, amid growing expectations of large fiscal spending from Prime Minister Sanae Takaichi's government.
Markets believe the large spending plan has the potential to drive a larger fiscal deficit, which could theoretically reduce the attractiveness of the domestic currency. This concern has put pressure on the yen as investors see the risk that financing the spending could exacerbate pressure on Japan's fiscal condition.
Speculation about large spending intensified after data showed Japan's economy grew slower than expected. Fourth-quarter flash GDP was recorded at just 0.1%, below the 0.4% forecast. However, this data signals Japan's return to growth after a 0.7% contraction in the third quarter of 2025.
Looking ahead, market attention will be focused on the release of Japan's National CPI for January, scheduled for release on Friday. Core inflation (CPI ex. Fresh Food) is expected to rise 2.0% annually, slowing from 2.4% in December—this data has the potential to be the next major trigger for the yen's direction.
Meanwhile, the US dollar strengthened ahead of the release of the FOMC Meeting Minutes from the January policy meeting at 19:00 GMT. The combination of Japanese factors (fiscal, GDP, CPI) and US factors (the Fed minutes) means that USD/JPY movements are potentially sensitive in the coming sessions. (asd)
Source: Newsmaker.id
