The Ministry of Labour officials noted that August's special payments exhibited significant volatility, primarily due to the majority of bonuses being disbursed in the first two months. Following the Bank of Japan's (BOJ) recent monetary policy meeting, where interest rates were maintained, Governor Kazuo Ueda indicated that the upward trend in wages is expected to persist into next year. However, uncertainties surrounding U.S. tariffs could disrupt corporate operating environments. In this context, former BOJ executive Kazuo Momma warned that recent substantial depreciation of the yen might prompt the central bank to consider tightening monetary policy. Since Sanae Takaichi's victory in the Liberal Democratic Party leadership election, the yen has depreciated, raising market concerns that her potential premiership could pressure the BOJ to delay rate hikes. In an interview with Reuters, Kazuo Momma pointed out that rising bearish sentiment towards the yen could motivate the BOJ to act at its October 29-30 meeting. Despite Governor Kazuo Ueda's cautious outlook on the U.S. economy and his reluctance to accelerate rate increases, persistent yen weakness could shift policy stances. He emphasized that yen depreciation primarily harms government interests by increasing import costs and fueling inflation, potentially eroding support for the ruling party. If the yen's decline accelerates, Sanae Takaichi might tacitly accept an earlier rate hike. With experience in drafting monetary policy and maintaining communication with decision-makers, Kazuo Momma considers yen weakness the sole factor likely to trigger an earlier tightening of monetary policy. Furthermore, Israel and Hamas have reached an agreement on the first phase of the peace protocol, which has bolstered global risk sentiment and may constrain the appreciation potential of safe-haven currencies such as the Japanese yen.

Federal Reserve officials at the September 16-17 policy meeting assessed that the risks to the U.S. labor market have increased sufficiently to warrant rate cuts, yet many participants remained cautious about elevated inflation while discussing the impact of current borrowing costs on economic activity. The minutes indicated that most attendees considered adjusting the federal funds rate target range to a more neutral level appropriate due to rising downside risks to employment. The minutes also reflected a renewed debate among Fed officials, with newly appointed Board member Stephen Miran and others prioritizing labor market protection and showing relative indifference to inflation, while some officials expressed concern that inflation could remain above the 2% target. In September, the Fed lowered the benchmark policy rate by 25 basis points to a range of 4.00%-4.25%. Forecast indicates that among the 19 participants, 9 anticipate two rate cuts, with Miran expecting more substantial easing; the remaining 9 expect a single rate reduction or no further cuts. Federal Reserve Chair Jerome Powell stated that monetary policy remains restrictive but did not commit to additional easing. The Fed's next policy meeting is scheduled for October 28-29, with markets pricing in a 25 basis point cut. Due to the federal government shutdown, the September employment report and next week's consumer price data may be delayed.

In the 1D timeframe, the USDJPY has broken above the ascending trendline and is forming a bullish alignment at the upper Bollinger Band. The MACD has formed a golden cross without signs of weakening momentum, and the RSI is at 71, indicating overbought conditions and a strong bullish sentiment. If the price sustains above 150, it is likely to challenge the previous high near 158.8; failure to hold may lead to a decline toward 148. In the 1W timeframe, the Bollinger Bands are widening upward, with SMAs diverging upward and the MACD line and signal line crossing above the zero-axis, suggesting a potential shift to an uptrend. The RSI at 64 indicates strong bullish momentum. Overall, the upward trend is expected to continue, pending confirmation of sustained bullish weekly candles, which would affirm the strength of the trend. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 153.03

Target Price: 158.8

Stop Loss: 150

Support: 150, 148.5, 146.6

Resistance: 155, 156.7, 158.8