USD/JPY Climbs as Markets Eye Japan Economic Data and BoJ Policy

The USD/JPY pair edged higher to 157.90 on Tuesday, as markets monitored Japan's economic data and the Bank of Japan's policy direction. Prime Minister Sanae Takaichi reassured investors by pledging to cut the consumption tax on food without issuing additional bonds, easing concerns about rising public debt. However, her government continues to pursue stimulative fiscal policies despite worries over the weak yen and funding challenges.

This week, investors are watching several key economic reports from Japan, including August wage data, the current account, and household spending, as well as September indicators like consumer confidence and machine tool orders. Attention is also on the Bank of Japan, with the summary of its September meeting highlighting concerns that inflation could stay above the 2% target for longer, keeping the possibility of another rate hike before year-end alive.

Technical analysis shows USD/JPY maintaining a short-term upward trend within a narrowing range. The pair settled above 157.54 and formed a consolidation range around 157.86-157.96. The main scenario suggests a rise towards resistance at 158.77, with a break above potentially opening the way to 159.36. However, a move below 157.54 would weaken the bullish outlook and increase the likelihood of a return to 156.50.

On the H1 chart, USD/JPY remains in consolidation around 157.96, with the Stochastic oscillator confirming buying momentum but also indicating a potential local pullback. As long as the price stays above 157.80, the focus is on a move towards 158.77, followed by a correction to 157.96. A confirmed break above 158.77 would bring 159.36 into focus as the next medium-term target.