The Japanese Yen fell by 0.5% against the US Dollar, lagging behind other G10 currencies. This drop happened as the market shifted focus due to new expectations of Bank of Japan tightening under PM Takaichi’s leadership. Right now, only 10% of economists expect a rate hike in October. Instead, 50% forecast it for December, and 38% predict it for January. The USD/JPY pair is rising but remains within the mid-149s to 153 range.

Market Insights From FXStreet

The FXStreet Insights Team, made up of journalists, delivers curated market advice from top experts. They provide commercial insights and contributions from both internal and external analysts. In other market news, the Dow has bounced back from recent losses, while crude oil is facing its 50-day SMA, leading to speculation about a possible rally. Gold saw a slight increase, stabilizing near $4,150 per troy ounce. This movement is driven by caution ahead of US CPI data, with the strong Dollar, changing Treasury yields, and easing trade tensions limiting volatility. Ripple (XRP) gained traction, trading above $2.40 as interest grew, while Aster slightly rose over $1.00. The positive market sentiment also boosted major cryptocurrencies like Bitcoin and Ethereum.

Outlook For The USD/JPY Pair

The Japanese Yen is expected to remain weak as expectations for a rate hike from the Bank of Japan have been delayed. Recent information supports this, with Japan’s core CPI for September 2025 cooling to 2.1% and preliminary Q3 GDP showing a slight dip. This gives the central bank reasons to hold off on changes. This policy gap is growing, especially since the U.S. Federal Reserve is keeping its aggressive stance with inflation above its target. Given this situation, we anticipate continued upward pressure on the USD/JPY pair in the upcoming weeks. Traders might consider buying USD/JPY call options with strike prices near the top of the recent 153 range to take advantage of a possible breakout. This approach offers a defined risk for capturing further yen weakness before year-end policy meetings. However, we should remain cautious as the pair approaches levels that previously triggered intervention from the Ministry of Finance in 2022 and 2024. To manage the risk of a sudden shift, using call spreads—buying a call and selling another at a higher strike—can limit potential profits but greatly reduce upfront costs. This helps define the trade’s risk-reward profile ahead of any potential government interventions. With the market now pricing in a rate hike for December or even January 2026, implied volatility on JPY options has decreased. We view this as an opportunity to buy longer-dated volatility, perhaps through straddles, as uncertainty may return before the December BoJ meeting. The current calm offers a good entry point for trades that can profit if market turbulence makes a comeback. Create your live VT Markets account and start trading now.

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