Conversely, the Japanese Yen benefits from speculation about imminent monetary policy tightening in Japan. Bank of Japan Governor noted that conditions for policy normalisation are improving, adding strength to the Yen. Global market caution and expectations of a BoJ rate hike contribute to the Yen\u2019s support.<\/p>\n
The BoJ policy meeting next Friday is expected to impact currency movements further. As of today, USD performance varied against major currencies, showing its strongest gain against the Australian Dollar. The heat map demonstrates percentage changes among major currencies with USD experiencing varying results against others, including a 0.54% drop against JPY.<\/p>\n
The current weakness in the US Dollar against the Japanese Yen presents a clear opportunity for us. The divergence is stark, with the Federal Reserve cutting rates while the Bank of Japan (BoJ) is openly discussing a rate hike. This setup strongly suggests continuing downward pressure on the USD\/JPY pair.<\/p>\n
The data supports a weaker dollar, going beyond just the recent jump in jobless claims to 236,000. We saw last week’s Non-Farm Payrolls report for November come in at just 165,000, missing expectations and confirming the cooling labor market trend. With the latest core inflation figures also easing to 3.5% year-over-year, the Fed has ample reason to signal more rate cuts for 2026, as markets now expect.<\/p>\n
In Japan, the case for monetary tightening is building momentum ahead of next week’s meeting. Japan’s national core CPI has remained above the BoJ’s 2% target for over a year and a half, last printing at 2.7% for October 2025. This persistent inflation gives Governor Ueda the justification he needs to follow through on his recent hawkish comments.<\/p>\n
Given the high event risk surrounding the BoJ meeting, we should consider buying USD\/JPY put options. This strategy allows us to position for a significant drop if the BoJ hikes rates, while limiting our maximum loss to the premium paid. Targeting strike prices below the major psychological level of 150.00 seems prudent, as a break of this level could accelerate selling.<\/p>\n
We must acknowledge that implied volatility is rising ahead of the meeting, making options more expensive. An alternative is to sell call spreads with strike prices well above the current level, using the premium collected to finance put purchases. This reflects our view that a sharp upward reversal is highly unlikely in the current environment.<\/p>\n
We should also remember the currency interventions from the Ministry of Finance back in 2024, which occurred when the pair was trading above 152.00. This shows a historical preference for a stronger yen, adding another layer of resistance to any potential upside. A sustained move below 150.00 would be technically significant, likely attracting a new wave of sellers.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/JPY fell as US jobless claims rose and Japanese rate hike expectations strengthened the Yen further.<\/p>\n","protected":false},"author":62,"featured_media":17038,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36640","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36640","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36640"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36640\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17038"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}