Key Moments
- Japan’s merchandise trade deficit came in at JPY 536.6 billion in September, far larger than the expected JPY 181.0 billion shortfall.
- USD/JPY traded around 158.30 in Asian dealings on Wednesday, with the pair maintaining a bullish technical bias above key moving averages.
- Japanese authorities highlighted close coordination between the government and the BoJ, while the Fed Chair kept a neutral tone on the next US rate decision.
Japan’s Trade Position Weakens as Growth in Flows Slows
USD/JPY advanced during Asian hours on Wednesday, trading near 158.30 after modest declines the previous day. The move came as the Japanese Yen (JPY) contended with fresh headwinds following the release of Japan’s latest merchandise Trade Balance figures from the Ministry of Finance.
Japan recorded a merchandise trade deficit of JPY 536.6 billion in September. While narrower than the JPY 1,111.9 billion shortfall in August, the figure substantially overshot expectations for a JPY 181.0 billion deficit and marked the fifth straight month of negative trade balance.
On a year-on-year basis, imports grew by 18.9%, easing from a 28.0% jump in August and coming in below the projected 19.6%. This was the slowest pace of import growth since May. Exports increased by 16.7% year-on-year, also missing estimates of 20.1% and marking their weakest growth rate in five months.
Despite the broader slowdown in import growth, crude oil imports surged 51.1%, reflecting Japan’s ongoing efforts to diversify its energy sources amid geopolitical uncertainties around the Strait of Hormuz.
Policy Coordination Emphasized by Japanese Authorities
On the policy front, Finance Minister Satsuki Katayama stated on Wednesday that the government is working in close coordination with the Bank of Japan (BoJ). She stressed that there is no significant disagreement between fiscal authorities and the central bank concerning the inflation outlook or the stance of monetary policy.
Katayama acknowledged that tax reductions can stimulate demand and push prices higher, but underscored that the government intends to maintain a proactive and responsible fiscal approach. According to her comments, policy efforts will focus on enhancing Japan’s supply capacity while avoiding an acceleration in inflation.
US Inflation and Fed Signals in Focus
In the United States, recent data indicated that Consumer Price Index (CPI) inflation accelerated in September. Market participants are now reassessing the Federal Reserve’s next steps following the latest remarks from Fed Chair Kevin Warsh.
Chair Warsh stated that he does not “prejudge” interest rate decisions, offering no explicit guidance on whether policymakers will opt for another rate hike or keep policy unchanged at the upcoming October meeting.
USD/JPY Technical Picture: Uptrend Still Intact
On the daily chart, USD/JPY is trading at 158.30, sustaining a constructive near-term tone. The pair remains above both the nine-day and 50-day Exponential Moving Averages (EMAs), which continues to underpin the broader uptrend.
The 14-day Relative Strength Index (RSI) is hovering around 54, signaling steady momentum that is not yet in overbought territory. This setup leaves room for buyers to extend the move higher. At the same time, the FXS Fed Sentiment Index reading of 127.51 points to a policy backdrop that remains supportive for the dollar.
On the downside, initial technical support is seen at the nine-day EMA at 158.20, followed by the 50-day EMA at 158.08. Together, these levels form a nearby demand band that reinforces the bullish structure. As long as USD/JPY trades above these moving averages on a closing basis, the technical bias favors further upside. A daily close below 158.08 would indicate waning momentum and could leave the pair vulnerable to a deeper corrective phase.
USD/JPY: Daily Chart
(The technical analysis of this story was written with the help of an AI tool. Know more.)
JPY Performance Against Major Currencies
Intraday moves in the foreign exchange market show the Japanese Yen underperforming, particularly against the Australian Dollar, where it registered the largest decline among the currencies listed.
The following table summarizes the percentage changes of the Japanese Yen relative to major peers, along with cross-moves between other key currencies. The base currency is shown in the left-hand column and the quote currency across the top row.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.06% | 0.03% | 0.00% | -0.42% | 0.09% | 0.17% | |
| EUR | -0.03% | -0.04% | 0.00% | -0.07% | -0.39% | 0.04% | 0.10% | |
| GBP | -0.06% | 0.04% | 0.04% | -0.04% | -0.34% | 0.05% | 0.14% | |
| JPY | -0.03% | 0.00% | -0.04% | -0.05% | -0.37% | 0.02% | 0.11% | |
| CAD | -0.00% | 0.07% | 0.04% | 0.05% | -0.33% | 0.08% | 0.17% | |
| AUD | 0.42% | 0.39% | 0.34% | 0.37% | 0.33% | 0.40% | 0.49% | |
| NZD | -0.09% | -0.04% | -0.05% | -0.02% | -0.08% | -0.40% | 0.10% | |
| CHF | -0.17% | -0.10% | -0.14% | -0.11% | -0.17% | -0.49% | -0.10% |
The heat map illustrates the percentage change of each currency pair. Selecting the Japanese Yen in the left column and moving horizontally to the US Dollar cell shows the performance of JPY (base)/USD (quote).
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