Insights 
VT 
The Japanese Yen weakened by 0.5% against the US Dollar, underperforming among G10 currencies. This occurred as market attention shifted due to updated BoJ tightening expectations within PM Takaichi’s leadership.
Only 10% of economists anticipate an October rate hike, with 50% predicting December and 38% foreseeing January. The USD/JPY pair is climbing, yet remains within the mid-149s to 153 range.
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Peripheral market developments saw the Dow recover recent losses, while crude oil confronted its 50-day SMA, spurring a speculated rally. Gold slightly advanced, stabilizing near $4,150 per troy ounce, driven by caution ahead of US CPI data, while the Dollar’s strength, variable Treasury yields, and alleviating trade tensions limited volatility.
Ripple (XRP) showed recovery momentum, trading above $2.40 amid growing interest, and Aster slightly gained, crossing $1.00. A positive market atmosphere strengthened major cryptocurrencies such as Bitcoin and Ethereum.
Outlook For The USD JPY Pair
The Japanese Yen’s weakness is likely to persist as market expectations for a Bank of Japan rate hike have been pushed back. Recent data supports this view, with Japan’s latest core CPI for September 2025 cooling to 2.1% and preliminary Q3 GDP showing a slight contraction, giving the central bank reason to wait. This policy divergence is widening, especially as the U.S. Federal Reserve maintains its hawkish stance with inflation still above its target.
Given this outlook, we see continued upward pressure on the USD/JPY pair in the coming weeks. Traders could consider buying USD/JPY call options with strike prices near the top of the recent 153 range to capitalize on a potential breakout. This strategy offers a defined risk for capturing further yen weakness before the year-end policy meetings.
However, we must remain cautious as the pair approaches levels that prompted intervention from the Ministry of Finance back in 2022 and 2024. To manage the risk of a sudden reversal, using call spreads—buying a call and selling another at a higher strike—can cap potential profits but significantly reduce the upfront cost. This defines the trade’s risk-reward profile ahead of any potential government action.
With the market now pricing a rate hike for December or even January 2026, implied volatility on JPY options has fallen. We see this as an opportunity to purchase longer-dated volatility, perhaps through straddles, in anticipation of uncertainty re-emerging as the December BoJ meeting approaches. The current calm provides an attractive entry point for trades that will profit if market turbulence returns.
