USDJPY rises to the highest level since July 2024 as snap election renewes fiscal fears

USDJPY Surges to Highest Level Since July 2024

USDJPY has reached its highest level since July 2024. This surge comes as Japanese PM Takaichi considers calling a snap election to restore the LDP's majority, reigniting fiscal concerns. Concurrently, the US dollar has weakened following news of the DOJ subpoenaing the Federal Reserve, raising worries over its independence. On the JPY front, recent economic data suggests no urgent action is required from the BOJ, with inflation hovering above the 2% target. The market currently prices in approximately 40 bps of tightening by year-end, but caution remains a significant theme.

Technical Analysis

Daily Chart

USDJPY has risen to the 158.87 level, where potential sellers may enter, anticipating a move back to the support at 154.50. Buyers will aim for a breakout to target 161.95.

4-Hour Chart

An upward trendline exists on the 4-hour chart, with expectations for buyers to step in around this trendline during a pullback, while sellers will seek a break lower.

1-Hour Chart

A minor upward trendline indicates bullish momentum, providing a good risk-to-reward setup for buyers aiming for new highs.

Upcoming Catalysts

Today’s focus is on the US CPI report, with additional data releases including November retail sales and PPI reports tomorrow.