Japanese Yen remains heavily offered; USD/JPY eyes 156.00 ahead of BoJ policy meeting
- The Japanese Yen attracts heavy selling amid some repositioning ahead of the BoJ meeting.
- Bets for an imminent BoJ rate hike on Friday and a weaker risk tone could limit JPY losses.
- Dovish Fed expectations might keep a lid on the move up for the USD and the USD/JPY pair.
The Japanese Yen (JPY) selling bias remains unabated through the first half of the European session on Wednesday, which, along with a goodish pickup in the US Dollar (USD) demand, lifts the USD/JPY pair beyond mid-155.00s in the last hour. The intraday JPY decline could be attributed to some repositioning trade ahead of the highly-anticipated two-day Bank of Japan (BoJ) meeting, starting Thursday. Apart from this, concerns about Japan's deteriorating fiscal condition, amid Prime Minister Sanae Takaichi's massive spending plan, contribute to the JPY's relative underperformance against its American counterpart.
Any meaningful JPY depreciation, however, still seems elusive in the wake of the growing acceptance that the BoJ will raise interest rates on Friday. This marks a significant divergence in comparison to rising bets for more interest rate cuts by the US Federal Reserve (Fed), which could keep a lid on the ongoing USD recovery from its lowest level since early October and could support to the lower-yielding JPY. Apart from this, the cautious market mood might help limit the downside for the safe-haven JPY, warranting caution before confirming that the USD/JPY pair's slide witnessed over the past week or so has run its course.
Japanese Yen remains heavily offered amid some repositioning ahead of BoJ policy meeting
- The Japanese Yen attracts some sellers during the Asian session on Wednesday amid some repositioning ahead of the highly-anticipated two-day Bank of Japan policy meeting, starting on Thursday. The central bank is widely expected to raise interest rates on Friday, and the bets were reaffirmed by the recent shift in rhetoric from BoJ Governor Kazuo Ueda.
- Ueda reiterated last week that the likelihood of the central bank's baseline economic and price outlook materializing had been gradually increasing. The BoJ is getting closer to attaining its inflation target, Ueda added. This offsets concerns about Japan's deteriorating fiscal condition, amid Prime Minister Sanae Takaichi's massive spending plan, and should underpin the JPY.
- The global risk sentiment remains on the defensive amid renewed worries about the health of China's economy and fears of the AI bubble burst. Moreover, the mixed US Nonfarm Payrolls report released on Tuesday fueled concerns about deteriorating labor market conditions in the world's largest economy and also tempered investors' appetite for perceived riskier assets.
- The US Bureau of Labor Statistics (BLS) reported that the economy added 64K jobs in November against consensus estimates for an increase of 50K. In contrast, October payrolls declined by 105K, while September job gains were revised down to 108K from the initial estimate of 119K. Adding to this, the Unemployment Rate climbed to 4.6% from 4.4% in the previous month.
- The data reaffirmed bets for further policy easing by the US Federal Reserve. In fact, traders are pricing in the possibility of two more interest rate cuts by the US central bank in 2026. This, in turn, keeps a lid on the overnight US Dollar recovery from a two-and-a-half-month low and suggests that the path of least resistance for the USD/JPY pair remains to the downside.
- Traders now look forward to speeches from influential FOMC members for more cues about the Fed's rate-cut path, though the market attention will be on the latest US consumer inflation figures on Thursday. Apart from this, the outcome of a two-day BoJ policy meeting on Friday will play a key role in determining the next leg of a directional move for the USD/JPY pair.
USD/JPY might aim to reclaim 156.00; intraday breakout through 100-hour SMA comes into play
A sustained strength beyond the overnight swing high, around the 155.20-155.25 region, which coincided with the 100-hour Simple Moving Average (SMA), might have already set the stage for additional gains. The USD/JPY pair now seems poised to climb further towards reclaiming the 156.00 mark. The momentum could extend further towards the monthly swing high, around the 157.00 neighborhood, touched last week.
On the flip side, the 155.00 psychological mark now seems to act as an immediate support, below which the USD/JPY pair could accelerate the fall towards retesting the monthly low, around the 154.35-154.30 region. This is followed by the 154.00 mark. A convincing break below the latter will mark a fresh breakdown and pave the way for a further near-term depreciating move.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.76% | 0.50% | 0.20% | 0.23% | 0.22% | 0.39% | |
| EUR | -0.30% | 0.45% | 0.18% | -0.11% | -0.08% | -0.09% | 0.08% | |
| GBP | -0.76% | -0.45% | -0.27% | -0.56% | -0.53% | -0.54% | -0.37% | |
| JPY | -0.50% | -0.18% | 0.27% | -0.29% | -0.26% | -0.28% | -0.10% | |
| CAD | -0.20% | 0.11% | 0.56% | 0.29% | 0.04% | 0.01% | 0.18% | |
| AUD | -0.23% | 0.08% | 0.53% | 0.26% | -0.04% | -0.01% | 0.14% | |
| NZD | -0.22% | 0.09% | 0.54% | 0.28% | -0.01% | 0.00% | 0.17% | |
| CHF | -0.39% | -0.08% | 0.37% | 0.10% | -0.18% | -0.14% | -0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
