Published: 8 December 2025,04:20
Daily Market Analysis New
*Bank of Japan signals readiness for a December rate hike, supporting the yen.
*Revised Q3 GDP shows Japan contracted 2.3% annualized, worse than forecast.
*USD/JPY remains volatile, balancing hawkish BOJ guidance against weaker economic data.
The Japanese yen has struggled to find a clear direction recently, with mixed fundamentals driving volatility in USD/JPY. Japanese government bond yields held firm amid speculation of a potential BOJ rate hike this month, after the central bank adopted a hawkish tone. Sources indicate that the BOJ is ready to raise interest rates in December, contingent on economic stability, and signaled a cautious, data-driven approach to further tightening.
Despite the hawkish signals, the yen’s gains were limited by disappointing economic data. The Cabinet Office revised Q3 GDP downward, showing an annualized contraction of 2.3%, faster than the 2.0% median forecast and the initial 1.8% reading. On a quarterly basis, the economy shrank 0.6%, compared with the 0.5% forecast and 0.4% initial estimate.
Economists expect the GDP revision to have only a marginal impact on the BOJ’s policy decision. The central bank is widely anticipated to raise its policy rate at the December 18–19 meeting, with the government signaling support for the move. USD/JPY remains sensitive to hawkish rhetoric from the BOJ and underlying economic data, suggesting continued short-term volatility for the pair.
USD/JPY is trading lower after retracing from the top of the downward channel, signaling that the bearish trend may continue. The pair is approaching the first support level at 154.30, with MACD showing diminishing bullish momentum and RSI at 42, remaining below the midline, suggesting further downside potential.
A confirmed breakout below 154.30 could indicate a double-break scenario, with the next target around 152.80. Conversely, if bearish momentum fails to persist, USD/JPY may rebound and re-test the top of the downward channel near 155.65–156.95, offering a potential short-term correction.
Resistance level: 155.65, 156.95
Support level: 154.30, 152.80
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