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    Scotiabank strategists report a 0.5% weakening of the Japanese Yen against the US Dollar, trailing other G10 currencies.

    by VT Markets
    /
    Nov 10, 2025

    FXStreet Insights Team Market Observations

    The FXStreet Insights Team offers market observations from expert analysts. This report provides valuable insights and analyses from both internal and external sources. The article emphasizes the need for personal research before making any investment decisions. Neither the author nor FXStreet is responsible for any choices made based on this information. The details shared are not personalized investment advice and carry financial risks. The market activities and content discussed are for informational purposes only and should not be viewed as buying or selling recommendations. Currently, the Japanese Yen is underperforming, falling about half a percent against the US dollar today. This decline is mainly due to positive market sentiment, as the threat of a US government shutdown lessens. The key question now is whether USD/JPY can remain above the 152 mark.

    Market Reactions to Bank of Japan Signals

    The yen’s weakness is linked to the growing interest rate gap between the US and Japan. Recently, yields on the US 10-year Treasury rose above 4.3%, increasing the difference over Japanese government bonds to nearly 350 basis points. This yield advantage makes holding US dollars more appealing than yen. Interestingly, the market is overlooking somewhat hawkish comments from the Bank of Japan. These comments suggest further policy normalization, building on the significant shift away from negative interest rates observed in 2024. This gap between the BoJ’s signals and market pricing poses a potential risk for those who are heavily short on the yen. Given this situation, there is an opportunity in the options market. The stability of risk reversals indicates that traders are not currently paying a high premium for protection against a swift recovery of the yen. A strategy of buying near-term USD/JPY call spreads could enable traders to benefit from potential gains while limiting their maximum risk if market sentiment changes suddenly. Create your live VT Markets account and start trading now.

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