USDJPY in turbulence: Japan’s political respite may become a trap for traders

Stagnation in US industrial production and easing trade tensions between the US and Japan pushed the USDJPY rate down to 150.50. Find out more in our analysis for 20 October 2025.

USDJPY forecast: key trading points

• US industrial production for September: previously at 0.1%, projected at 0.1%
• Easing trade tensions between the US and Japan
• USDJPY forecast for 20 October 2025: 149.20

Fundamental analysis

The forecast for 20 October 2025 takes into account that political instability in Japan is gradually easing. After setting another price record, the USDJPY pair continues its correction and is trading around 150.50.

Key drivers and events that may affect USDJPY movement:

• The yen weakened significantly on Monday after Sanae Takaichi, a supporter of stimulative economic and monetary policy, was virtually confirmed as Japan’s next prime minister. The ruling and opposition parties plan to sign a coalition government agreement on 20 October, reinforcing expectations that Japan will maintain its accommodative policy, putting further pressure on the yen
• The USDJPY pair is attempting to strengthen amid improving market sentiment: fading concerns over US regional banks and easing trade frictions between the US and Japan have reduced demand for the yen as a safe-haven asset
• On the other hand, Bank of Japan Governor Kazuo Ueda reiterated a cautious approach to interest rate decisions, stating that more data is needed before any rate hikes. This continues to weigh on the yen, as markets expect not just rhetoric but concrete action

Today’s USDJPY forecast also considers that US industrial production for September will likely remain unchanged at 0.1%. Stagnant output and the ongoing government shutdown do little to support the dollar, creating conditions for the yen to regain some of its lost ground.

USDJPY technical analysis

On the H4 chart, the USDJPY price has formed a Shooting Star reversal pattern near the middle Bollinger Band and is currently trading around 150.60. At this stage, it continues a downward wave following the signal from the pattern, with a target near 149.20.

However, the USDJPY forecast also considers an alternative scenario in which the pair might rise towards 151.30 before a decline.

Summary

Political stabilisation in Japan and dovish signals from the Bank of Japan continue to pressure the yen, while US industrial stagnation and persistent uncertainty over the government shutdown may limit dollar growth. USDJPY technical analysis suggests a decline towards the 149.20 support level.

Open Account