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VT 
The Japanese yen extended its rally for a third straight session on Thursday, with the USD/JPY pair easing to 150.72 as traders unwound bearish bets amid growing uncertainty surrounding Japan’s political landscape.
The Liberal Democratic Party’s (LDP) recent split with coalition partner Komeito has unsettled expectations for a smooth transition of leadership to Sanae Takaichi as Japan’s next prime minister.
Although the LDP has scheduled a leadership vote for 21 October, opposition parties have yet to confirm their participation, leaving the succession process in doubt and adding to the overall political unease.
Investors who had positioned for a weaker yen under Takaichi’s anticipated pro-spending agenda are now reversing those trades, with some shifting back towards safe-haven assets amid rising political risk.
BoJ Remains Dovish, But Risk Aversion Lends Yen Support
Bank of Japan (BoJ) board member Naoki Tamura reaffirmed the central bank’s cautious stance, warning against tightening monetary policy too early. He emphasised the need to avoid a relapse into deflation and sluggish wage growth, a clear signal that Japan’s ultra-loose monetary framework is likely to stay in place for some time.
Meanwhile, the yen has also drawn strength from safe-haven inflows, supported by a weaker US dollar, escalating US-China trade tensions, and the prolonged US government shutdown, all of which have intensified global risk aversion.
Technical Analysis
The USD/JPY pair is trading around 150.72, down 0.23%, as investors take profits following the pair’s recent climb to the 152.00 region, its highest level since July.
The retracement comes amid renewed speculation that Japanese authorities may intervene to curb excessive yen weakness, while the US dollar cools off on softer Treasury yields and mixed macroeconomic data.
From a technical perspective, USD/JPY remains in a strong uptrend but is showing short-term exhaustion. After the rally from the 147.00 base, price action has begun to consolidate just below key resistance at 152.00.
The 5-day moving average has started to flatten, signalling slowing bullish momentum, while the 10-day MA is catching up as potential dynamic support. The next key support sits near 149.50, followed by 148.30, where previous consolidation occurred.
The MACD indicator also suggests early signs of weakening momentum with the histogram beginning to contract while the MACD line is curling toward the signal line, hinting at a possible short-term pullback.
However, the broader trend remains bullish as long as the pair stays above the 148.00–148.50 region.
Fundamentally, yen traders remain highly sensitive to any verbal intervention from the Bank of Japan (BoJ) or the Ministry of Finance.
With US yields still relatively elevated and the BoJ maintaining ultra-loose policy, interest rate differentials continue to support the dollar. Yet, heightened volatility around the 152.00 mark means traders are cautious about adding new longs.
Outlook
In the near term, the USD/JPY bias appears tilted to the downside as political instability and renewed safe-haven demand strengthen the yen. However, the broader trajectory will hinge on upcoming signals from the Bank of Japan and the Federal Reserve.
Markets will be watching closely to see whether this yen rebound evolves into a sustained recovery or merely a short-term corrective phase.
