Sign Up Log in

    USD/JPY falls and recovers amid hawkish remarks from the BoJ and rising Japanese yields

    by VT Markets
    /
    Dec 2, 2025
    The USD/JPY currency pair dropped below 155.0 on Monday after Japanese 10-year bond yields increased. This followed hawkish comments from Bank of Japan Governor Ueda. The pair later bounced back as the market adjusted to these changes. Japanese bond yields rose by about 6 basis points but then fell by nearly 3 basis points. Investors are now considering a potential 20 basis point hike in December. The USD/JPY momentarily traded below 155.0, and further declines this week could happen unless BoJ officials tone down their hawkish stance.

    Impact of Recent BoJ Remarks

    The recent drop below 155.00 in USD/JPY is important for us. This decrease was driven by hawkish comments from the Bank of Japan, which led to a surge in 10-year government bond yields. We believe there is a strong case for the yen to strengthen further unless the BoJ unexpectedly relaxes its position soon. The BoJ’s hardline approach is supported by the latest inflation data, which we are closely monitoring. Japan’s national core CPI for October 2025 was 2.9%, remaining above the central bank’s 2% target for the 19th consecutive month. This persistent inflation pressure, unlike the temporary spikes seen in previous years, makes it likely that the BoJ will tighten its policy more. On the other side, recent U.S. economic data points to a weaker outlook for the dollar. The most recent Non-Farm Payrolls report for November revealed that 155,000 jobs were added, which was below the expected 180,000. This difference in outlook between a hawkish BoJ and a possibly pausing Fed is likely to push the pair lower.

    Market Positioning Strategy

    In the coming weeks, we recommend positioning for a continued drop in USD/JPY. This means considering buying JPY calls or USD puts, especially as one-month implied volatility has risen to 11.5%, showing increased market expectations for a significant move. The market is currently anticipating a 20 basis point hike at the December meeting, so options strategies should focus on this key event. Create your live VT Markets account and start trading now.

    here to set up a live account on VT Markets now

    In This Article

    see more

    Back To Top
    server
    Click Click Click Click Click
    Follow us on

    Hello there 👋

    How can I help you?

    Chat with our team instantly

    Live Chat

    Start a live conversation through...

    • Telegram
      hold On hold
    • Coming Soon...

    Hello there 👋

    How can I help you?

    telegram

    Scan the QR code with your smartphone to start a chat with us, or click here.

    Don’t have the Telegram App or Desktop installed? Use Web Telegram instead.

    QR code