The Japanese yen has outperformed in 2026, ranking as the second best performing G10 currency in the half year to date, though results were aided by sizeable FX intervention over three days in the summer, including joint support with the US Treasury. Even so, the currency has beaten the dollar on a one-month view, with markets showing reluctance to drive USD/JPY beyond 158.70, a level aligned with the 200-day sma.
Expectations for a December BoJ rate hike eased after a late-week Nikkei 225 sell-off, but strong September wage data has kept the prospect of further policy tightening alive next month and into next year. The team projects USD/JPY could edge down towards 155.00 on a three-month view, while arguing that a firmer JGB market would reinforce any yen recovery. Attention turns to Q3 GDP data and October national CPI inflation, both due next week, as key inputs for BoJ watchers assessing the medium-term path for JPY.
