Published: 2 December 2025,06:13
Daily Market Analysis New
*Japanese yen strengthens amid growing expectations of a December BoJ rate increase.
*BoJ Governor Kazuo Ueda signals potential hike, citing wage trends and economic data.
*U.S. rate-cut expectations exert downward pressure on the dollar, boosting yen appeal.
The Japanese yen rebounded sharply after recent losses, driven by renewed speculation that the Bank of Japan could raise interest rates as early as December. BoJ Governor Kazuo Ueda delivered the clearest signal to date that the central bank is weighing a rate hike, emphasizing that upcoming policy decisions will account for wage trends, inflation dynamics, and broader economic data.
Traders have repriced expectations for a December BoJ move, reflecting growing confidence that the central bank may act to stabilize the currency following a slump to 10-month lows last month. Ueda also indicated that the BoJ would provide more clarity on the pace of subsequent rate increases once the policy rate reaches 0.75%, underscoring a cautious but hawkish tilt in the near term.
The yen’s advance is further supported by market expectations of a near-term rate cut by the Federal Reserve. Dovish signals from the U.S. have added downward pressure on the dollar, amplifying demand for the Japanese currency as investors seek relative yield stability amid diverging monetary policy paths.
Overall, the interplay of potential BoJ tightening and U.S. dovishness has created a favorable environment for the yen. Traders are now closely monitoring wage data, core inflation trends, and upcoming BoJ commentary for further clues on the central bank’s policy trajectory, while also watching broader G10 flows as positioning adjusts to shifting interest rate expectations.
Technical Analysis
USD/JPY initially broke below the key upward trendline and the support level at 155.95, extending its losses. However, the pair later staged a rebound, retesting resistance near 155.70. This classic breakout–rebound–retest pattern suggests a potential continuation of the downtrend if the resistance holds.
A failure to break above 155.70 would likely push USD/JPY lower, with the next support levels at 154.30 and 152.80 coming into focus. Conversely, a decisive break above 155.70 could signal a short-term recovery, though the overall market structure remains tilted toward bearish.
Resistance level: 155.70, 156.95
Support level: 154.30, 152.80
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