Insights 
VT 
The USD/JPY pair is trading lower, affected by remarks from Japanese MoF officials and the US Treasury Secretary about monitoring the yen. The exchange rate recently stood at 152.27, with a potential trend towards a bearish reversal.
Though no BoJ rate hikes are expected until next March, conditions are set for policy changes. A weakened USD/CNY has also influenced USD/JPY. There is currently no bullish momentum, and support levels are at 151.15, 150.10, and 149.20, while resistance is at 153.30.
Market Dynamics
Market dynamics are shaped by Fed-BoJ policy differences. Future movements will depend on BoJ meeting outcomes and Fed policy announcements. Traders should monitor for any signals of a double top, as this often indicates a reversal trend.
We are seeing the USD/JPY pair trade lower, around 152.27, as Ministry of Finance officials are once again signaling their discomfort with a weak yen. The recent comments from US Treasury Secretary Scott Bessent, urging the Bank of Japan (BoJ) to focus on inflation, add pressure for a policy shift. These verbal warnings should be taken seriously, as we are now trading in the same territory that triggered direct currency intervention back in the autumn of 2022.
The long-standing policy divergence between the Fed and the BoJ appears to be narrowing, which supports a lower USD/JPY. The Federal Reserve is now expected to deliver its second consecutive interest-rate cut, a significant change from the hiking cycle we saw through 2023. Meanwhile, with Japan’s core inflation having stayed above the Bank’s 2% target for more than two years now, pressure is mounting on the BoJ to finally normalize its policy.
Technical Perspective
From a technical standpoint, momentum has clearly shifted in favor of a bearish reversal. A double top has formed near the 153.30 level, which is a classic signal that the upward trend is exhausted and a move down is likely. Derivative traders should view this as a key resistance level, with initial downside targets at the 21-day moving average around 151.15 and then the 150.10 support level.
The focus now is entirely on the BoJ meeting tomorrow, which presents a significant event risk. While markets are not fully pricing in a rate hike until next March, we believe the conditions for a surprise move are in place after the BoJ finally ended its negative interest rate policy back in March 2024. Even if they don’t hike, any change in language hinting at a faster normalization schedule could trigger a sharp drop in the pair, making put options an attractive strategy to hedge or speculate on downside.
