- The Japanese Yen recovers part of the overnight drop to a near three-month low against the USD.
- Intervention fears and a softer risk tone support the JPY, although BoJ uncertainty caps gains.
- Expectations of smaller Fed rate cuts and rising US bond yields boost the USD and offer support to USD/JPY.
The Japanese Yen (JPY) advances against its US counterpart during the Asian session on Tuesday, reversing part of the previous day’s decline to the lowest level since late July. The recent verbal intervention by the Japanese authorities, along with a slight deterioration in global risk sentiment, turn out to be key factors offering some support to the JPY, considered a safe haven. However, the JPY’s upside appears limited due to uncertainty over the timing and pace of future rate hikes by the Bank of Japan (BoJ).
Meanwhile, concerns about the potential increase in deficit spending following the US presidential election on November 5 and expectations of less aggressive easing policy by the Federal Reserve (Fed) pushed up bond yields. US Treasury to its highest levels in almost three months. This could further help limit any significant appreciation move for the lower-performing JPY. In addition to this, the underlying bullish tone around the US Dollar (USD) supports the prospects of some buying emerging at lower levels around the USD/JPY pair.
Daily Market Summary: Japanese Yen Draws Support on Intervention Fears, Bulls Seem Uncommitted Amid BoJ Uncertainty
- The Japanese Yen has attracted some buyers on Tuesday amid speculation about possible government intervention, especially after the recent drop below the psychological level of 150.00 against its US counterpart.
- Japan’s deputy finance minister for international affairs, Atsushi Mimura, said last Friday that excessive volatility in the currency market is undesirable and that authorities are closely watching FX movements with a high sense of urgency.
- Bank of Japan Governor Kazuo Ueda said last week that the central bank is in no rush to raise interest rates and stressed the need to focus on the economic impact of unstable markets and external risks.
- Furthermore, dovish comments from Japanese Prime Minister Shigeru Ishiba add a layer of uncertainty over the new political direction’s preference for monetary policy, which will likely act as a headwind for the JPY.
- Meanwhile, the US dollar jumped to its highest level since early August amid growing conviction that the Federal Reserve will proceed with modest rate cuts next year as the US economy remains relatively healthy. .
- Dallas Fed President Lorie Logan said Monday that she expects gradual rate cuts if the economy meets forecasts and that the U.S. central bank will need to be agile with monetary policy decisions amid the risks to the inflation target.
- Separately, Minneapolis Fed President Neel Kashkari said investors should expect a modest pace of rate cuts in the coming quarters, although evidence of a rapidly weakening labor market could lead to faster rate cuts. .
- Additionally, Kansas Fed President Jeffrey Schmid said the US central bank must prevent significant fluctuations in interest rates and urged careful, consistent and deliberate methods to lower interest rates.
- Meanwhile, expectations that Donald Trump’s victory in the US presidential election on November 5 could see the launch of more potentially inflation-causing tariffs triggered the overnight sell-off in US government debt.
- The rate-sensitive 2-year U.S. government bond yield closed on Monday at its highest level since Aug. 19, while the 10-year Treasury bond yield hit the highest level since July 26, supporting the US dollar.
Technical Outlook: USD/JPY could accelerate the positive move and consolidate a month-long uptrend once the 151.00 hurdle is cleared
From a technical perspective, any subsequent decline now appears to find immediate support near the 150.30-150.25 region ahead of the 150.00 psychological level. A convincing break below the latter could make the USD/JPY pair vulnerable to an accelerated decline towards the intermediate support of 149.65-149.60 en route towards the 149.10-149.00 zone. Some continued selling will suggest that the positive move seen over the last month or so has come to an end and will shift the short-term bias in favor of the bears.
On the upside, the bulls could now wait for sustained strength above the 151.00 level before opening new positions. With the oscillators on the daily chart remaining comfortably in positive territory, the USD/JPY pair could then rise to the 151.60 area before aiming to reclaim the round 152.00 figure. The momentum could extend further towards the 152.65-152.70 region en route towards the 153.00 level.
The Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of Japanese and US bonds or the risk sentiment among traders, among other factors.
One of the mandates of the Bank of Japan is currency control, so its movements are key for the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to the political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the depreciation of the Yen against its main currency pairs. This process has been exacerbated more recently by a growing policy divergence between the Bank of Japan and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s ultra-loose monetary policy stance has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This favors the widening of the spread between US and Japanese 10-year bonds, which favors the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.