The Japanese yen is cautiously watching the BoJ policy outlook, and USD/JPY may come under pressure and test its monthly low.
2025-12-17 11:32:14
The yen edged lower in Asian trading on Wednesday, putting pressure on the USD/JPY pair as investors adopted a cautious wait-and-see approach ahead of the BoJ policy meeting. Market focus is on the two-day Bank of Japan meeting starting this Friday, with investors hoping to glean signals about the policy path for 2026 from the meeting and officials' speeches.
Recent market expectations for a BoJ rate hike are rising, which is providing support for the yen. Last week, the Bank of Japan governor stated that the likelihood of the central bank's economic and price forecasts being gradually realized is increasing, and that Japan's inflation target is close to being achieved. This eased concerns about a deteriorating fiscal situation and also provided support for the yen.
Meanwhile, declining global risk appetite, particularly concerns about slowing Asian economic growth and artificial intelligence-related bubbles, has led to a resurgence of risk aversion, limiting the yen's downside.
In the US, non-farm payrolls increased by 64,000 in November, exceeding market expectations of 50,000. However, October's non-farm payrolls were revised down to -105,000, and September's job gains were also revised downwards, with the unemployment rate rising to 4.6%. The data indicates a slowdown in the US labor market, exacerbating market expectations for further interest rate cuts by the Federal Reserve and limiting the dollar's short-term rebound, thus putting pressure on the USD/JPY pair.
Considering the fundamentals, USD/JPY remains under downward pressure in the short term. Traders will be focused on speeches by Federal Reserve officials and US consumer inflation data released on Thursday, while also closely watching the outcome of the BoJ policy meeting. These factors will determine the exchange rate's next move.
From the daily chart, the exchange rate has gradually declined from its highs over the past week, forming a short-term bearish consolidation structure. The daily chart oscillators are beginning to show negative signals, indicating that downward pressure is gradually accumulating.
The current price is finding support near the monthly low of 154.30. A decisive break below 154.00 would signal the start of a new downtrend, opening up further downside potential. On the upside, USD/JPY is facing resistance around 155.20, a level close to the 100-hour simple moving average, where short-term rebounds may be limited.
If the exchange rate breaks through this resistance level, it may trigger a short-term bullish rebound, targeting 156.00, and further gains could even test the monthly high of 157.00. Looking at the 4-hour chart, the exchange rate's short-term rebound has stalled, but it remains below key resistance, indicating a weak short-term trend. Investors should continue to carefully observe intraday fluctuations.
Overall, USD/JPY is expected to remain under pressure and fluctuate in anticipation of the BoJ's policy changes.
Editor's Note:
The USD/JPY pair is currently exhibiting signs of consolidation under pressure in the short term. Market expectations of a BoJ rate hike are supporting the yen, while weak US labor data and anticipated potential Fed rate cuts are limiting the dollar's rebound. Attention will be focused on this week's BoJ meeting and US inflation data. The pair is expected to trade within the 154.35–155.25 range in the short term, with a breakout from either key level potentially triggering a new round of directional volatility.
Recent market expectations for a BoJ rate hike are rising, which is providing support for the yen. Last week, the Bank of Japan governor stated that the likelihood of the central bank's economic and price forecasts being gradually realized is increasing, and that Japan's inflation target is close to being achieved. This eased concerns about a deteriorating fiscal situation and also provided support for the yen.
Meanwhile, declining global risk appetite, particularly concerns about slowing Asian economic growth and artificial intelligence-related bubbles, has led to a resurgence of risk aversion, limiting the yen's downside.
In the US, non-farm payrolls increased by 64,000 in November, exceeding market expectations of 50,000. However, October's non-farm payrolls were revised down to -105,000, and September's job gains were also revised downwards, with the unemployment rate rising to 4.6%. The data indicates a slowdown in the US labor market, exacerbating market expectations for further interest rate cuts by the Federal Reserve and limiting the dollar's short-term rebound, thus putting pressure on the USD/JPY pair.
Considering the fundamentals, USD/JPY remains under downward pressure in the short term. Traders will be focused on speeches by Federal Reserve officials and US consumer inflation data released on Thursday, while also closely watching the outcome of the BoJ policy meeting. These factors will determine the exchange rate's next move.
From the daily chart, the exchange rate has gradually declined from its highs over the past week, forming a short-term bearish consolidation structure. The daily chart oscillators are beginning to show negative signals, indicating that downward pressure is gradually accumulating.
The current price is finding support near the monthly low of 154.30. A decisive break below 154.00 would signal the start of a new downtrend, opening up further downside potential. On the upside, USD/JPY is facing resistance around 155.20, a level close to the 100-hour simple moving average, where short-term rebounds may be limited.
If the exchange rate breaks through this resistance level, it may trigger a short-term bullish rebound, targeting 156.00, and further gains could even test the monthly high of 157.00. Looking at the 4-hour chart, the exchange rate's short-term rebound has stalled, but it remains below key resistance, indicating a weak short-term trend. Investors should continue to carefully observe intraday fluctuations.
Overall, USD/JPY is expected to remain under pressure and fluctuate in anticipation of the BoJ's policy changes.
Editor's Note:
The USD/JPY pair is currently exhibiting signs of consolidation under pressure in the short term. Market expectations of a BoJ rate hike are supporting the yen, while weak US labor data and anticipated potential Fed rate cuts are limiting the dollar's rebound. Attention will be focused on this week's BoJ meeting and US inflation data. The pair is expected to trade within the 154.35–155.25 range in the short term, with a breakout from either key level potentially triggering a new round of directional volatility.
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