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October 20, 2025

USD/JPY Eyes 152–153 After Japanese Coalition Boosts Dovish BoJ Outlook

Overview

USD/JPY has strengthened following reports that the LDP and JIP will form a coalition that is likely to install Sanae Takaichi as prime minister. Markets are pricing a renewed fiscal impulse and a continued delay to BoJ rate hikes, which has weakened the yen and pushed USD/JPY above the 38.2% Fibonacci retracement. Technicals now highlight near-term upside targets while risks from policy intervention and macro surprises persist.

Key drivers

Political change in Tokyo: The prospective coalition and Takaichi’s candidacy have revived expectations for larger fiscal spending and a looser BoJ stance, underpinning yen weakness; similar dynamics were seen during the snap election episode.

BoJ policy expectations: Traders expect the Bank of Japan to further delay normalizing policy. Any unexpected hawkish communication or direct market intervention would be a near-term game changer for the yen.

Macro calendar: High-volatility Chinese GDP prints are scheduled (QoQ and YoY) and could swing risk sentiment — a strong Chinese print would support risk assets and potentially weaken the yen further; a miss could trigger risk-off flows that strengthen the yen. See the China GDP print preview for related context.

Market sentiment and technical picture

Short-term sentiment: Bullish toward USD/JPY with a confidence level reflected in recent positioning and technical breakouts.

Technical levels to watch:

  • Immediate resistance cluster: 152.00–152.25 (near-term supply) and 153.00 (psychological resistance).
  • Primary objective on momentum trades: ~151.75 (61.8% retracement confluence plus the 200-hour SMA).
  • Support: 150.50–150.00; a breakdown below 150.00 would negate the current short-term bullish thrust.

Risks that could reverse the move

1) BoJ intervention — verbal warnings or direct FX intervention could quickly strengthen the yen and invalidate long momentum plays.

2) Stronger-than-expected Japanese economic data or a global risk-off shock that drives safe-haven flows into the yen.

3) Profit-taking and supply congestion around 152.25–153.00; traders should expect choppy action near these levels.

Trading ideas and execution

Momentum long: Enter on conviction above intraday resistance with targets at 151.75 → 152.00–152.25 and a stretch target near 153.00. Use a trailing stop (e.g., below nearest swing low or 150.50 depending on timeframe) and size positions to limit downside if intervention occurs.

Buy-the-dip: Look for pullbacks into 150.50–150.00 as structured risk-on continuation trades; prefer defined-risk entries and scale-in techniques to manage potential volatility.

Event-driven short setups: Consider short EUR/USD exposure given sovereign-rating pressure on France (recent downgrades) and EUR weakness around 1.1650 — the pair may remain vulnerable to further downside on risk of widening French–German spreads.

Risk management

Keep stops tight when trading momentum in USD/JPY and reduce size ahead of known high-impact releases (Chinese GDP prints) or when headlines suggest possible BoJ communication or intervention. Use position sizing to limit single-trade risk to a small percentage of equity and monitor correlated FX moves (e.g., EUR/JPY, USD/CHF) for early signs of shifting market sentiment.

How traders can use automation

Automated execution helps enforce discipline in fast-moving FX regimes. Traders looking to implement defined entry/exit rules and layered scaling may benefit from a forex trading bot or the trade assistant to manage intraday orders and trailing stops around volatile events like the Chinese GDP prints and potential BoJ communications.

Crypto and equity-linked risk sentiment can amplify FX moves; market participants who also do crypto trading should monitor cross-asset flows and consider automated hedging or correlation-aware strategies using tailored bots such as the Bitcoin Trading Bot.

Conclusion

USD/JPY’s breakout above the 38.2% retracement reflects a combination of political change in Japan and dovish BoJ expectations. Short-term technical targets sit at 151.75, 152.00–152.25 and 153.00, while key support rests in the 150.50–150.00 zone. Traders should weigh the clear upside momentum against risks of BoJ intervention and macro surprises (notably China’s upcoming GDP prints) and employ strict risk management.

For traders who want to apply these setups with disciplined entries, stops and scaling, consider using automated trading solutions to execute faster and with less emotion. Try an AI trading bot on PlayOnBit to test automated strategies for forex trading, crypto trading and other markets — automated trading can help you capture moves while managing risk effectively.