Insights 
VT 
Inflation Expectations and Exchange Rate Volatility
Scott Bessent urges Japan to allow BoJ’s policy space to keep inflation expectations stable and avoid exchange rate volatility. Kiuchi plans to evaluate the effects of FX changes and emphasises avoiding rapid fluctuations. Takaichi’s pro-stimulus stance may delay BoJ tightening, while traders expect a rate hike in December or early next year, contrasting with dovish Federal Reserve expectations. The US central bank is expected to cut borrowing costs by 25 basis points today, with another possible cut in December, prompting a USD/JPY short-covering move.
The USD/JPY pair displays a bearish double-top pattern, indicating potential depreciation. Oscillators suggest support near 151.10-151.00, with a break leading to potential losses towards 150.00, with minor support around 150.45. Any recovery beyond the Asian session peak near 152.20 may face resistance near 152.90-153.00. A breakout beyond 153.25-153.30 allows reclamation of 154.00 and possibly reaching 154.75-154.80.
Federal Reserve And Bank Of Japan Updates
The BoJ announces its interest rate decision after its eight annual meetings. A hawkish BoJ outlook supports the Yen, while a dovish stance or rate cut is typically unfavourable. The next announcement is scheduled for 30 October 2025.
We are facing a critical 24 hours with the Federal Reserve decision today, October 29th, followed by the Bank of Japan’s update tomorrow. The market is pricing in a dovish Fed versus a potentially hawkish BoJ, which sets up a fundamental clash between the two currencies. Traders are understandably hesitant to take large positions before these major risk events unfold.
