USD/JPY Surges Past 152.50 on Japan Stimulus Speculation

The U.S. Dollar extends gains against the Yen, hitting fresh two-week highs near 152.60, amid reports of a major Japanese fiscal package and expectations of rising inflation.

The USD/JPY pair rallied for a fifth straight session on Thursday, climbing beyond 152.50 to reach 152.60, its highest level in two weeks. The move comes as investors react to speculation that Japan is preparing a substantial USD 90 billion stimulus package aimed at supporting households facing rising living costs.

According to Reuters, citing a government document, the new cabinet under Prime Minister Sanae Takaichi is considering this fiscal plan to cushion the impact of higher prices. The proposal follows a similar package introduced last year, raising concerns about further strain on Japan’s already fragile public finances.

Fiscal Concerns Weigh on the Yen

The Japanese Yen remains under heavy pressure, sliding sharply since Takaichi — viewed as a fiscal dove — took office. Markets expect her administration to prioritize spending, which could delay or weaken the Bank of Japan’s (BoJ) tightening efforts.

Meanwhile, the U.S. Dollar remains supported by safe-haven flows as renewed U.S.-China trade tensions dampen global risk sentiment. However, traders remain cautious ahead of the U.S. CPI report due Friday, which could influence the Fed’s policy outlook.

Inflation Data in Focus

Later today, Japan’s Statistics Bureau will release the September National Consumer Price Index (CPI). Economists expect inflation to have accelerated, reinforcing the BoJ’s gradual path toward policy normalization and potentially lending some support to the Yen.

A higher CPI reading would typically be bullish for the Yen, as it supports expectations of tighter monetary policy. Conversely, a soft print could further undermine the currency, especially amid fiscal expansion concerns.