USD/JPY price nears 155.00 due to limited BoJ support
USD/JPY climbs to three-month high as dollar's strength widens rate gap, yen weighed down
The Yen is facing an uphill battle against the dollar, as the USD/JPY pair hovers near the 154.00 with key resistance levels at 155.00 and potentially 156.00 now coming into focus.
Hints of the Japanese government intervention have provided temporary relief, but the pressure on the Yen remains persistent. This contrasting price difference reflects Japan’s cautious monetary stance against the backdrop of the Fed’s firm grip on U.S. interest rates.
A recent statement from Japan’s Finance Minister Katsunobu Kato highlighted Japan’s goal to break free from deflation while pursuing economic recovery and fiscal health. This fiscal strategy aims to support the Yen, but it may fall short as the Bank of Japan (BoJ) remains hesitant to shift decisively toward higher interest rates. September’s BoJ minutes showed a gradual approach to rate increases, with officials still cautious about external pressures, particularly from the U.S. market.
Meanwhile, speculation is mounting over potential FX interventions, with Chief Cabinet Secretary Yoshimasa Hayashi and Vice Finance Minister Atsushi Mimura both noting that the government is closely monitoring the Yen’s moves. While these statements hint at government support for the Yen, market confidence in sustained intervention remains limited, as Japan’s broader political landscape poses hurdles for rapid monetary tightening.
Optimism on US dollar keeps the Yen under pressure
In contrast, the U.S. Dollar has recently seen its largest one-day gain since September 2022, backed by optimism over economic growth and inflation prospects under Trump’s influence. Traders are betting that these factors could slow down the pace of Fed rate cuts, giving the Dollar a stronger footing. Rising U.S. bond yields, notably, the 10-year Treasury yield reaching 4.45% only reinforce this outlook, widening the yield differential with Japan and keeping the Yen under pressure.
As the USD/JPY inches closer to 155.00, investors will be watching to see if these resistance levels hold or if Dollar strength pushes the pair toward new highs. The Fed’s cautious approach to rate cuts, coupled with limited Yen support from the BoJ, keeps the path of least resistance for USD/JPY pointed upward.
USD/JPY price hits three-month high as Trump victory widens Fed-BoJ rate gap. This fresh momentum reinforced bullish sentiment around the currency pair
