Japanese Yen: BoJ tightening expectations lift JPY against US Dollar – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret highlight USD/JPY trading near 155.65 with the Japanese Yen (JPY) outperforming G10 peers as markets price in a Bank of Japan (BoJ) hike alongside elevated domestic risk around CPI and policy decisions.
Scotiabank strategists Shaun Osborne and Eric Theoret note that the USD/JPY trading pair is currently at 155.65, with the Japanese Yen (JPY) outperforming other G10 currencies amid expectations of a Bank of Japan (BoJ) hike. The shift from FX intervention to a more fundamentally driven approach has made the JPY-supportive, with key support levels at 153/152 and an upside target of 158 following the breaking of the 155 barrier.
The JPY has strengthened by 0.4% against the USD and is outperforming all other G10 currencies, including the Swedish Krona (SEK), into Thursday's North American session. While fundamental releases have been scarce, near-term domestic risk remains elevated due to the upcoming CPI release and BoJ policy decision. Markets have swiftly priced in a BoJ hike over the past few weeks, reflecting a significant shift in government and BoJ approaches to currency management from intervention to a more data-driven method.
The outlook for central bank policy remains JPY-supportive as markets price in a more aggressive tightening path for the BoJ. Scotiabank maintains support levels at 153 and 152 for USD/JPY, shifting the upside focus to 158 after the latest break of 155.
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