USDJPY begins December by sliding 0.5% in reaction to the latest comments from the Bank of Japan (BOJ) Governor, who for the first time in months clearly suggested the possibility of an interest rate hike at the BOJ’s December meeting.
USDJPY broke below the 10-day exponential moving average (EMA10; yellow) today, the level where the previous correction of the uptrend initiated in October had originally stalled. The pair is currently testing the 50% Fibonacci retracement of the last upward wave, although the key level for a true trend reversal remains 154.550. This level coincides with (1) the second-to-last resistance zone, (2) the hammer candle that preceded the latest rebound, (3) the 30-day EMA (light purple), and (4) the 61.8% Fibonacci retracement. Source: xStation5
What is shaping USDJPY today?
- Bank of Japan Governor Kazuo Ueda said during today’s remarks that “the BOJ is considering the pros and cons of raising interest rates at the upcoming meeting.” Until now, Ueda had only emphasized that any further tightening would depend on inflation and economic activity evolving in line with projections. The BOJ Governor also added that the impact of tariffs on Japan’s economy remains marginal, effectively ending a period in which “uncertainty” dominated the narrative.
- Inflation continues to keep real interest rates below zero, and the intensifying price pressure should generate more hawkish sentiment within the BOJ despite pro-growth pressure from Prime Minister Sanae Takaichi. According to the latest data, Tokyo inflation remained at 2.8%, above the expected decline to 2.7%. In addition, today’s PMI report for Japan highlighted the fastest rise in input prices in five months, which may soon be passed on to consumers.
- The market-implied probability of an interest rate hike in Japan has risen to 60% for December and 90% for January. The immediate reaction is also visible in the bond market, where yields on 10-year Japanese government bonds reached a new high at 1.873%.
The material on this page does not constitute financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other specific needs. All information provided, including opinions, market research, mathematical results and technical analyzes published on the Website or transmitted To you by other means, it is provided for information purposes only and should in no way be construed as an offer or solicitation for a transaction in any financial instrument, nor should the information provided be construed as advice of a legal or financial nature on which any investment decisions you make should be based exclusively To your level of understanding, investment objectives, financial situation, or other specific needs, any decision to act on the information published on the Website or sent to you by other means is entirely at your own risk if you In doubt or unsure about your understanding of a particular product, instrument, service or transaction, you should seek professional or legal advice before trading. Investing in CFDs carries a high level of risk, as they are leveraged products and have small movements Often the market can result in much larger movements in the value of your investment, and this can work against you or in your favor. Please ensure you fully understand the risks involved, taking into account investments objectives and level of experience, before trading and, if necessary, seek independent advice.
