Fundamental Analysis

  • NVIDIA's strong earnings triggered a rebound in the Nikkei 225
  • However, diplomatic tensions between Japan and China have not fully eased, creating temporary uncertainty
  • Japan's long-term government bond yield has surged past 1.8%, raising serious concerns about a decline in Japan's creditworthiness

Is a "Japanese Truss shock" approaching?

The sharp rise in yields shows that selling pressure on Japanese bonds is not stopping. While the diplomatic conflict may only have a short-term effect, the impact of large-scale fiscal spending is beginning to surface. If bond prices fall further, combined with stock declines and yen depreciation, Japan could slip into a "triple decline," where momentum accelerates rapidly and becomes extremely difficult to stop.

To halt such a spiral, options would include an emergency rate hike or withdrawing large fiscal spending measures. Either option would come with significant economic pain.

This situation resembles the UK's Truss shock, where unfunded fiscal plans triggered a collapse in bond prices, stock declines, and a sharp drop in the British pound, ultimately forcing the government to retract its policies. The Truss administration was then compelled to resign in record time.

Japan's situation is highly similar. Nothing makes Japan immune — history tends to repeat itself.

Given this backdrop, USD/JPY is expected to continue rising, and aggressive dip-buying is recommended.

USD/JPY daily chart showing breakout above 157 yen with concerns about Japanese bond yields and potential Truss shock scenario (November 20, 2025)
[USD/JPY – Daily Chart]

USD/JPY Day-Trading Strategy

The yen's weakness is likely to continue. Unless the Takaichi administration reverses its fiscal expansion, a sustained depreciation of the yen appears to be the natural scenario.

On the 1-hour chart, the 10-EMA is closely following price action. We want to confirm whether the 10-EMA will act as support. The basic strategy remains to buy on dips.

Dip-buying opportunities may emerge around 156.65 yen, and 156.35 yen also appears to be a potential support zone.

USD/JPY 1-hour chart showing 10EMA support and buy-on-dip opportunities around 156.65-156.35 yen (November 20, 2025)
[USD/JPY – 1-Hour Chart]

Today's Key Events

Note: Due to the U.S. government shutdown, American economic indicators may be delayed.

Indicator / Event Time
U.S. Nonfarm Payrolls (September) 22:30
U.S. Existing Home Sales 24:00