Published: 3 December 2025,07:09
Daily Market Analysis New
*Yen trading on a knife-edge – USD/JPY swings reflect a tug-of-war between risk-on sentiment and hawkish BoJ expectations .
*BoJ tightening priced in – Governor Ueda’s hawkish remarks lifted rate-hike probabilities to ~80% for the December 18–19 meeting.
*Finance Minister Katayama’s comments on non-fundamental yen moves fuel speculation of possible government steps to curb excessive depreciation.
The Japanese Yen continues to trade on a knife edge, oscillating between safe-haven outflows driven by improved risk sentiment and hawkish tailwinds stemming from mounting expectations of a Bank of Japan policy shift. On Tuesday, the yen weakened mildly as Asian equities recovered from Monday’s selloff, reducing immediate demand for haven assets. But deeper depreciation remains limited as traders brace for what could be the BoJ’s most consequential meeting in years.
Governor Kazuo Ueda’s remarks on Monday signaling that the probability of meeting the BoJ’s economic and price objectives is “rising significantly” sparked a dramatic repricing across Japanese rates markets. Two-year JGB yields surged above 1% for the first time since 2008, 10-year yields hit a 17-year high, and 30-year yields posted a fresh record, underscoring the market’s belief that a December hike is now a real possibility. Rate markets currently price an 80% chance of tightening at the December 18–19 meeting, up sharply from last week’s 60%.
This hawkish shift comes against a backdrop of growing intervention warnings. Finance Minister Katayama reiterated over the weekend that recent yen moves “are not driven by fundamentals,” fueling speculation that authorities may step in if JPY weakness accelerates again. Meanwhile, Tuesday’s rebound in USD/JPY following a strong 10-year JGB auction highlights how sensitive the pair remains to yield volatility on both sides of the Pacific.
On the U.S. front, Monday’s disappointing ISM Manufacturing data and rising odds of a December Fed rate cut dragged USD/JPY to a two-week low before the pair partially recovered. President Trump’s hint that Kevin Hassett viewed as a dove could replace Powell also weighed on the dollar temporarily, adding to downward pressure in the pair.
For now, USD/JPY trades within a tug-of-war: improving risk sentiment weakens the yen, but BoJ-driven hawkish repricing and simmering intervention risk cap upside. As long as Japanese yields remain elevated and global markets anticipate Ueda’s next move, the balance of risks is tilted toward renewed yen strength especially if upcoming U.S. labor data confirms economic cooling.
USDJPY on the chart is currently showing early signs of weakening after failing to sustain above the long-term ascending trendline that has guided the pair’s multi-week advance. Price has slipped into a clear descending channel, indicating that bullish momentum has stalled and the market is now correcting lower within a structured bearish pullback. The pair is struggling around the 155.80–157.00 zone, which now acts as immediate resistance after the breakdown. As long as USDJPY remains inside this descending channel, downside pressure is expected to persist.
RSI is hovering near the mid-40s, reflecting weakening momentum without entering oversold territory, which suggests room for further downside if sellers push decisively. MACD lines are still below the zero axis and show only a mild attempt at a bullish cross, indicating that momentum remains bearish until a stronger confirmation develops.
Resistance level:157.00, 158.15
Support level: 155.70, 154.30
Trade forex, indices, metal, and more at industry-low spreads and lightning-fast execution.
Sign up for a PU Prime Live Account with our hassle-free process.
Effortlessly fund your account with a wide range of channels and accepted currencies.
Access hundreds of instruments under market-leading trading conditions.
Trading Platforms
Learn
About PU Prime
Corporate
Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.
Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.
By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.
Thank You for Your Acknowledgement!
Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.
Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.
Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.
Thank You for Your Acknowledgement!
