USD/JPY continues its decline for the second consecutive day, trading above 148.50 and finding support at the 200-day SMA. Pressure on the U.S. dollar comes from fears of a possible temporary suspension of federal government operations. On Monday, President Donald Trump is set to meet with congressional leaders to discuss government funding. If no agreement is reached, a shutdown could begin as early as October 1, coinciding with the implementation of new tariffs on trucks, pharmaceuticals, and other goods. According to Reuters, this conflict could also delay the release of the September employment report and other key economic data.

The dollar's weakness and the fall in USD/JPY are also driven by increased expectations of a Fed rate cut in October, following the release of U.S. inflation data for August. According to the CME FedWatch tool, markets are now pricing in nearly an 88% probability of a rate cut in October and 65% for another cut in December.

In Japan, traders' focus will shift to Tuesday's release of the Bank of Japan's "Summary of Opinions" and August retail sales data. Minutes from the BoJ's July meeting indicate the regulator is prepared to consider further rate hikes, provided economic growth and inflation remain steady.

However, political uncertainty in Japan could create additional headwinds for the yen. The leadership election of the Liberal Democratic Party (LDP), scheduled for October 4, could delay monetary tightening plans if a candidate with a more dovish stance on rates wins.

From a technical perspective, oscillators on the daily chart remain positive, and the pair is holding above the key 200-day SMA, signaling that bulls are not ready to give up. But failure to defend this support level would nullify the bulls' efforts in USD/JPY, dragging spot prices below the 148.00 round level and leading to a test of last week's low near 147.50, with a possible pause around the 50-day SMA.

On the other hand, a breakout above the 149.00 round level would restore a bullish outlook for the pair.