USD/JPY: Range-bound view on BOJ caution – BBH

Brown Brothers Harriman's Elias Haddad points out that USD/JPY has reached its 200-day moving average due to strong Dollar performance, but anticipates the currency pair to remain within a 155.00-160.00 range in the short term. Japan's Q3 Tankan report and the Bank of Japan's Summary of Opinions indicate a high hurdle for the BOJ to tighten monetary policy quicker, implying hawkish stance but a cautious rate hike.

Japan's Tankan survey for all industries reached a 35-year peak of 21, up from 18 in Q2; however, businesses anticipate a drop to 15 in Q4. Inflation expectations stayed stable. The Summary of Opinions was optimistic about direction but moderate about the speed of policy changes. The Cabinet Office urged BOJ policymakers to assess the long-term impact of previous policy rate increases, adding to the pressure for a slower rate hike cycle.

(This story was crafted with assistance from an AI tool and edited by a human editor.) The FXStreet Insights Team comprises journalists who select market insights from respected experts. The material includes observations from commercial analysts and supplementary insights from internal and external analysts. AUD/USD is currently trading near its two-month low, hovering around the mid-0.6900s in the Asian trading session on Thursday, supported by a bullish US Dollar.

Despite softer US PCE data, inflation concerns stemming from oil prices continue to bolster elevated US bond yields. Additionally, geopolitical tensions between the US and Iran further strengthen the US Dollar, bolstering the pair. The broad US Dollar rally undermines hawkish BOJ expectations and the potential for Japanese intervention.

Gold remains stable on Thursday as a stronger US Dollar and rising US Treasury yields suppress upside potential. At the time of publication, XAU/USD was trading around $4,167, up 0.26% for the day, struggling to capitalize on its early recovery. Bitcoin fluctuates between support at $82,500 and resistance at $85,000, while Ethereum trades below $2,700, finding support at the $2,600 level.

Ripple has fallen below the crucial $1.50 level. The US Dollar is entering the September Nonfarm Payrolls (NFP) release near record highs, and recent analyses are divided on whether the US Dollar will continue to gain momentum or has already peaked. In the Eurozone, inflationary pressures may unexpectedly bolster the Euro (EUR), which fell to its lowest level since May 2025, trading below the January peak of 1.2082.