Insights 
VT 
Key Points
- USDJPY fell 0.18% to 156.15 after testing the 157 handle.
- BoJ speculation grows, with a rate hike potentially on the table next month.
- Holiday-thinned trade raises intervention risk, with US markets closed for Thanksgiving.
- Broader US dollar softness also contributed to the pullback.
The Japanese yen rebounded sharply on Thursday, breaking through the 156 barrier against the dollar after earlier weakening toward multi-decade lows.
Market participants cited increased verbal intervention risk from Japanese officials, particularly with the US Thanksgiving holiday reducing global liquidity—a window previously used for surprise yen support.
The threat alone appears to have succeeded in halting the USDJPY’s ascent, at least temporarily. While no direct intervention has occurred yet, authorities have made their displeasure with yen depreciation clear, and the pair’s retreat suggests traders are increasingly wary of getting caught offside.
BoJ Eyes Rate Hike
Adding to the yen’s tailwinds, reports have emerged suggesting the Bank of Japan is preparing markets for a possible rate hike in December—an uncharacteristically hawkish signal from the historically dovish central bank.
The shift is reportedly driven by persistent domestic inflation, yen weakness, and a decline in political pressure to maintain ultra-low rates. While a move next month isn’t guaranteed, the idea of policy normalisation in Japan has introduced fresh downside risk to USDJPY, particularly if the Fed accelerates its own pivot to rate cuts.
Technical Analysis
USDJPY remains firmly in an uptrend, climbing steadily from the 142 region in September to trade just under 157 in recent sessions.
The structure remains bullish overall, with price consistently riding above its short-term moving averages (5, 10, and 30), although the current pullback to 156.15 signals some cooling after a strong leg higher.
The MACD shows waning upside momentum—while still positive, the MACD line is curling down toward the signal line, and the histogram is flattening.
This suggests a potential pause or minor retracement rather than an immediate reversal. Support lies near 155, where the 10-day moving average is positioned, and a deeper pullback could test the 154–153.50 zone.
If bulls reclaim 157.50 with conviction, the pair could retest the highs and potentially push toward 160, depending on US yield dynamics and Bank of Japan commentary.
Outlook
For now, intervention risk is doing the heavy lifting, reining in the dollar’s rise. But the bigger story may lie with the BoJ’s evolving stance; if Japan joins the global tightening narrative in earnest, the yen could reclaim more ground in Q1 2026.
That said, USDJPY remains highly sensitive to global yield differentials and US data flow. Should the Fed indeed cut in December while the BoJ hikes, the current resistance near 157 may prove a medium-term top. Traders should stay alert for policy clues and volatility spikes, especially in thin liquidity conditions.
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