• The USD/JPY outlook remains broadly bullish with mild pullbacks amid intervention fears.
• The US dollar gains safe-haven demand due to political chaos in Japan and Europe.
• Investors are eying consumer sentiment data today for more impetus.

The US dollar trades mixed against the Japanese yen on Friday after marking a fresh eight-month top above the 153.00 level. FOMC September meeting minutes revealed that most policymakers urged a 25 bps rate cut with a cautious but dovish tone. Markets interpreted this as a confirmation for further easing before year-end, putting pressure on the US dollar.

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However, Japan’s shifting political scenario dominated the yen’s trajectory following the surprise victory of Sanae Takaichi in the LDP leadership race. This sparked the odds of a more expansionary fiscal policy, like ex-Prime Minister Abe’s economic policies. As a result, the investors have trimmed the bets on near-term Bank of Japan tightening.

Takaichi’s policy stance suggests continuity of the existing agenda, with markets anticipating additional fiscal stimulus that could delay the BoJ’s rate normalization plans. Despite this, Japan’s inflation has remained stubbornly above 2% for three years, keeping hopes of a rate hike alive this year.

The dovish expectations of BoJ with a politically uncertain environment heavily weighed on the yen before posting a mild recovery in the Asian session on Friday. The Japanese currency found support from safe-haven demand as equities slid, while officials warned of intervention in case of an aggressive one-sided move of yen. Finance Minister Katsunobu Kato said on Friday, “We are currently seeing one-sided and rapid movements in the market… The government will carefully assess any excessive or disorderly movements.”

On the other hand, the US dollar remains broadly strong amid relative economic resilience and safe-haven demand from ongoing political turmoil in Japan and Europe. The Dollar Index (DXY) marked a fresh 2-month top on Thursday despite traders betting on two Fed rate cuts this year. The continued government shutdown for the second week adds more to the uncertainty. However, the Bureau of Labor Statistics recalled the staff to complete the September consumer inflation data, reassuring investors that the data will be released before the Fed’s October meeting.

The USD/JPY pair remains upward as the yen struggles with policy divergence and political instability. However, the bullish momentum could see a setback amid intervention risks as an ex-official said that the government intervention would become evident if the price hits 160.00.

USD/JPY Key Events Ahead

• FOMC member Daly speaks
• FOMC member Musalem speaks
• Prelim UoM Consumer Sentiment
• Prelim UoM Inflation Expectations

Consumer sentiment data remains essential today as investors are cautious when gauging business activity without primary data.

USD/JPY Technical Outlook: Correction Before Upside

The USD/JPY 4-hour chart shows signs of correction as the RSI remains in the extreme overbought region. The pair has been off the highs, looking to test the 20-period MA around 152.20. Finding acceptance below it could push the price down to the resistance-turned-support around 150.00. A big up gap formed last Friday shows the probability of a deeper correction towards 147.50 to fill the gap.

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On the upside, immediate resistance lies at the recent top near 153.30 ahead of 12^th Feb highs of 154.80. However, the bullish move could find many pullbacks due to profit-taking.

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STORY LINK GBP/USD Forecast: Pound Sterling Slides vs Dollar Amid UK Budget Concerns

The Pound to US Dollar (GBP/USD) exchange rate fell to a two-week low on Thursday as renewed speculation over the UK’s upcoming autumn budget dragged on Sterling.

At the time of writing, GBP/USD was trading at around $1.3361, down around 0.3% from Thursday’s opening levels.

The Pound (GBP) came under pressure on Thursday as traders grew increasingly uneasy about what Chancellor Rachel Reeves’s autumn budget might contain.

With no major UK data releases to distract markets, investors focused on the looming fiscal statement, due at the end of November.

Much of the conversation continues to centre around how Reeves will reconcile her pro-growth pledges with the pressing need to repair public finances.

Market watchers largely agree that a combination of higher taxes and restrained public spending will be unavoidable.

Yet, the uncertainty over which sectors or households will bear the brunt of these changes has left Sterling vulnerable.

At the same time, the recent uptick in UK gilt yields is fuelling further concerns over borrowing costs, adding to the headwinds facing the Pound.

The US Dollar (USD) found modest support on Thursday following a rebound from the previous session’s Fed-driven selloff.

Minutes from the Federal Reserve’s September meeting confirmed a dovish tilt, showing broad support among policymakers for last month’s quarter-point cut and further easing through the rest of 2025.

Markets are now pricing in another 50bps of cuts by year-end, most likely via two additional 25bps reductions in October and December.

However, demand for the ‘Greenback’ ticked up again on Thursday as investors adopted a more cautious stance ahead of a speech by Fed Chair Jerome Powell, with some hoping he might strike a firmer note on inflation or the path of monetary policy.

GBP/USD Forecast: Weak US Confidence to Weigh on the Dollar?

Looking ahead, the Pound to US Dollar exchange rate could recover some ground on Friday if upcoming US consumer confidence data underwhelms.

The University of Michigan’s latest sentiment index is expected to show a further dip in optimism, with households feeling the strain from stubborn inflation, softening labour market conditions, and political uncertainty surrounding the ongoing government shutdown.

If the data disappoints, the US Dollar could come under renewed selling pressure.

Meanwhile, with no fresh UK data due before the weekend, Sterling’s direction will likely hinge on broader risk appetite and any shifts in global market sentiment.

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TAGS: Pound Dollar Forecasts

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Tim Boyer

STORY LINK Euro to Dollar Forecast: EUR/USD to see Fresh Slide Toward 1.1500

The Euro to Dollar (EUR/USD) exchange rate remains pinned near six-week lows around 1.1620 as dollar strength endures. ING warns that a break below 1.16 could trigger a fresh slide toward the 1.1500 area, with only limited rebound potential in the near term.

EUR/USD Forecasts: Under Pressure

EUR/USD found support close to 1.1600, but rally attempts have been limited with the pair trading around 1.1620 and still close to 6-week lows.

The lack of US data continued to dampen activity with the dollar holding a firm tone. For now, the US shutdown has not had a negative impact on the dollar.

ING commented; “We prefer the lower end of a two-month trading range holding at 1.1580/1600 for EUR/USD. If not, we could see another sharpish fall to the 1.1500 area.”

UoB also sees scope for a limited correction; “The rebound from oversold conditions suggests that instead of continuing to decline, EUR is more likely to trade in a range today, expected to be between 1.1600 and 1.1660.”

Scotiabank added; “We look to a near-term range bound between support at 1.16 and resistance at 1.1650.”

It did, however, add; “Support appears limited between 1.16 and the early August low under 1.14.”

Global political developments remained a key element for global markets.

As far as France is concerned, outgoing Prime Minister Lecornu stated on Wednesday that support for early elections had faded and that President Macron would nominate a new Prime Minister by the end of this week.

MUFG commented; “In what looks like a climbdown by President Macron, the suspension of pension reform has been put on the table as a way to reach a compromise. This would help break the gridlock although an estimated EUR 3bn-3.5bn of savings would have to be found over the coming two years to cover the cost.”

There was a rally in French bonds, although underlying pressure remained.

MUFG added; “Still, risks remain high and political uncertainty will persist curtailing euro buying. FX moves have been very modest.”

Federal Reserve minutes from the September meeting stated that a few members could have voted for no change in interest rates at that meeting and there were concerns over inflation.

Nevertheless, most members stated that it was likely to be appropriate to ease policy further this year.

Markets are still pricing in close to a 95% chance that rates will be cut again at the October meeting.

Scotiabank commented; “Wednesday’s FOMC minutes offered a mixed message as policymakers balanced concerns about downside risks to the labor market and upside risks to inflation, ultimately leaning dovish to confirm the market’s expectations for additional rate cuts this year.”

The US government shutdown is continuing with Republicans and Democrats unable to secure the necessary votes to break the deadlock.

The economic cost of the shutdown will gradually increase and HSBC commented; “Overall, the implications of the US government shutdown for the USD are uncertain, but most likely lean to the weak side, in our view.”

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TAGS: Euro Dollar Forecasts

Created on October 09, 2025

• The British pound had rallied early during the trading session on Wednesday, but it looks like it is starting to discover the concept of gravity, after what has been in an explosive 5 days against the Japanese yen.
• The ¥205 level is a large, round, psychologically significant figure that will attract a lot of attention, and it’s probably worth noting that the candlestick for the session looks to be a bit of a shooting star.

Technical Analysis

The technical analysis is obviously bullish for this market after the Japanese election, and of course the massive gap higher that jumped over the ¥200 level is a significant area of importance, and I think that’s an area where a lot of people would be looking at as a massive support level. The shooting star for the trading session, assuming that’s exactly how we close, will end up being assigned that perhaps we are finally seeing some profit-taking, and quite frankly it makes quite a bit of sense considering that many traders out there might have a 400 pip gain in just the last couple of trading sessions.

Ultimately, if we were to break out above the top of the shooting star, then the ¥206 level could be a resistance barrier, but at this point in time I think this is essentially going to be a “buy on the dips” type of scenario, and over the next couple of days we may actually have a chance to do just that. However, extreme patience will be needed because a trade will need to be confirmed via a bounce, and of course chasing the market all the way up here is a great way to lose money. Unfortunately, there are probably traders who bought this at ¥205, and may find themselves in serious trouble. By being a little bit patient, you can take advantage of what is clearly a shift to the bullish side.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Image © Adobe Images

Our forecast for the pound vs. dollar made two ten days ago was bang on the money.

The pound to dollar exchange rate has behaved exactly as we said it would in a short-term forecast set out ten days ago.

Our Week Ahead Forecast issued on Monday, September 29, looked for a slight GBP rebound, followed by a more concerted decline to a noted support area. Here is the chart overlay from that day:

Now, keeping that overlay and fast forwarding to today, here is where we are:

The call proved to be unusually accurate. Typically, the arrows are supposed to give an approximation of directionality, but this time, the target levels were also correct.

So, where to next? Clearly we are in a bullish setup for the dollar, even with the U.S. government shutdown underway.

Past shutdowns have tended to weigh on the dollar, but this time around, the currency is giving it a nonchalant shrug.

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The shutdown also brings a dearth of official data, and the Greenback looks to be treating this as a classic ‘no news is good news’ environment.

But, it’s also worth pointing out that ex-USD, there is a lot going on, and for some key currencies, the news is clearly not great:

The JPY is the big faller as new Prime Minister Sanae Takaichi is elected. She is a devout follower of the Abenomics faith: i.e. get the central bank to keep interest rates low and then buy up all the government debt you can issue. This kills expectations for further rate hikes and flattens the yen. As USD/JPY rises, all the other USD- crosses rise too.

The EUR rally has hit the buffers on the reality that France’s domestic political setup is an intractable mess. Sure, the government can muddle on, but in the big picture, it becomes more likely the ECB will have to step in to support French government bonds at some point.

This will effectively mean the ECB rescues a fiscally irresponsible country, and the rest of the Eurozone will ask why they have to behave and France gets away with whatever it likes. This isn’t good for Eurozone fiscal integration and points to the perennial weaknesses of the bloc.

Also, Germany’s economic data has really disappointed of late, indicating another poor quarter is underway.

The GBP is facing significant fiscal challenges too. Unlike France, the UK does not live in a big monetary union underpinned by Germany and where the ECB is poised to lend assistance. The bond market will come knocking on Number 11’s door before it does at the Bercy building in Paris. With Labour unwilling to cut spending, higher taxes are coming. Businesses are starting to struggle under the weight of the tax increases implemented this year, and anxiety is growing ahead of another big-tax budget in November.

So, with some big currencies under pressure, the USD has little choice but to rise.

Gains can continue into year-end, further pressuring GBP/USD, but come 2026, some fundamental weaknesses in the U.S. can come to the fore again, and the bigger USD selloff can resume.

GBP/EUR Investment Bank Consensus Forecasts Cut

The median and mean forecasts, that provide a consensus forecast for GBP/EUR, have fallen.

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Created on October 09, 2025

• The US dollar initially did rally a bit during the early hours here on Wednesday but gave back those gains to show signs of life again. Ultimately, this is a market that I think is going to continue to be very noisy in general.
• But I also recognize that we have a situation where we are basically hanging around between the 1.39 level on the bottom and the 1.40 level on the top. I do think that eventually the US dollar ends up outperforming the Canadian dollar and we do break above the 1.40 level. If and when we do that, I think we’ve got a situation where traders will really start to look towards the 1.4250 level.

On a Move Lower…

A breakdown below the 1.39 level opens up a potential move down to the 200 day EMA. But in general, I think you’ve got a situation where you’re still looking to buy dips. The interest rate differential still favors the uh US dollar over the Canadian dollar. And I think with this being the case, we look at any opportunity to buy on a dip as a gift. Now, keep in mind that Friday we have the Canadian employment numbers coming out. And that of course has a major influence on this pair and will continue to be important to keep in the back of our mind. With this, I like the idea of buying this pair. I do think eventually we will go much higher. But really at this point in time, we’re just looking for the next catalyst. And again, that catalyst could very well be the Friday session with that jobs number. Also, keep in mind that the US government is still shut down, and therefore we are without any significant US data at the moment, but this could change suddenly.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Created on October 09, 2025

• It looks like we are going to see yet another situation like we have seen over the last several days where the Euro gets sold off pretty early. But when the Americans show up, the United States dollar starts to shrink. And I think that is part of what’s going on here. American traders are just simply selling the US dollar.
• That being said, the 1.16 level continues to offer support. And if we were to break down below that level, I think you’ve got a situation where we could really start to break down at that point, the market could drop to the 1.14 level, which of course is right about where the 200 day EMA is currently hanging around.

US Dollar Was Supposed to Collapse.

Remember, we were told that the US dollar was going to lose its world’s reserve currency status and that it was going basically to zero. And just about any time you start hearing talk like that, you’ve hit the bottom. I don’t know if the US dollar has bottom yet, but it’s definitely in the process of making that argument. The circled candlestick is from the FOMC press conference and that clearly did not weaken the US dollar. We are seeing gold shoot straight up in the air and seeing people talk about de-dollarization because of gold, but both are strengthening. The 1980s had both strengthening, so it doesn’t necessarily mean anything at this point in time. If we were to rally from here, the 1.18 level will offer significant resistance, and that’s assuming that we can even get there, because we’ve tried multiple times over the last two weeks and just haven’t been able to do that. So, with that being said, I think you’ve got a situation where you’re fading rallies at the first signs of exhaustion still.

Ready to trade our daily Forex forecast? Here’s a list of some of the best regulated forex brokers to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The EURJPY pair succeeded in resuming its bullish attempts yesterday, to hit the extra target at 177.80, to settle below it announces its confinement within tight track that is represented by the initial support at 176.95, and 177.80 level forms a key barrier against the bullish trading.

We remain neutral due to the instability of the price, until surpassing the previously- mentioned levels, to confirm the suggested targets in the near trading, the price success in breaching the barrier and holding above it will increase the chances for resuming the main bullish trend, attempting to reach 178.45 followed by the trading towards the bullish channel’s resistance at 179.60 level, while the decline below the extra support will support activating the attempts of gathering the gains, to reach 176.20 directly, then testing the next support near 175.20.

The expected trading range for today is between 176.90 and 177.80

Trend forecast: Neutral

With yields rising at the same time that the is falling, the Japanese economy is highly vulnerable to any additional setbacks, especially given the country’s extreme sovereign debt load.

USD/JPY Key Points

• With the yen falling and Japanese bond yields on the rise, the Japanese economy is vulnerable to a budget crisis akin the UK’s in 2022.
• Komeito’s failure to endorse Japan’s new PM-apparent Sanae Takaichi is an ominous omen for her tenure.
• For USD/JPY, there’s little in the way of technical resistance until 155.00 (the 78.6% Fibonacci retracement) and then the 159.00 zone beyond that.

If you were actively trading this time three years ago, this current environment may feel eerily familiar.

Back in September 2022, the UK selected Liz Truss as its next Prime Minister. At the time, the was in a clear downtrend while UK sovereign yields were on the rise. A few weeks later, Truss’s Finance Minister, Kwasi Kwarteng, introduced a “mini-budget” focused on fiscal stimulus (large-scale borrowing and tax cuts) for the economy, and the market soundly rejected the budget, driving long-term to multi-decade highs and the pound to multi-decade lows against most major rival currencies:

Source: StoneX, TradingView

Liz Truss ultimately dismissed Kwarteng a few weeks later and then resigned, making her the shortest-serving UK Prime Minister in UK history.

It’s cliché to say that “history doesn’t repeat, but it does rhyme,” but there are some eerie parallels with Sanae Takaichi’s nascent tenure as Japan’s Prime Minister. Last weekend, Takaichi was selected as the leader of the ruling LDP party, making her the Prime Minister apparent.

Takaichi is seen as a protégé of Shinzo Abe, who advocated heavily for fiscal and monetary stimulus to support the moribund Japanese economy. Like the pound three years ago, the yen has been in a clear downtrend for months, and have been rising consistently for years:

Source: StoneX, TradingView

Much like Truss at the outset of her tenure, Takaichi’s leadership has encountered early turbulence, as Komeito, the LDP’s coalition partner, hesitated to endorse her, sparking doubts about her grip on power. While we have yet to see a catalyst akin to Kwarteng’s mini-budget fiasco, the yen is hitting multi-decade lows against the euro and pound, while longer-term sovereign yields are surging.

With yields rising at the same time that the yen is falling, the Japanese economy is highly vulnerable to any additional setbacks, especially given the country’s extreme sovereign debt load:

Source: IMF

Japanese Yen Technical Analysis: USD/JPY Daily Chart

Source: StoneX, TradingView

Looking at the chart above, USD/JPY is in the midst of a huge three-day, post-election surge, rising more than 500 pips from Friday’s close to today’s high. More to the point for technically-inclined traders, the rally has taken the pair through previous resistance at 150.80 and the 61.8% Fibonacci retracement of the H1 drop at 151.65. From here, there’s little in the way of technical resistance until 155.00 (the 78.6% Fibonacci retracement) and then the 159.00 zone beyond that.

While the short-term price momentum remains strong, the pair is now peeking into “overbought” territory on the 14-day RSI, hinting at the potential for a near-term pullback if we get any kind of positive political news out of Japan. That said, traders would likely look to buy any short-term dips as long as the breakout above 150.80 (and the longer-term fiscal issue) remains intact.

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