Japanese Yen weakens amid less hawkish BoJ as bears shrug off fresh intervention warning

The USD/JPY pair shows signs of optimism as the week begins, climbing back from a low near 157.00 following the Bank of Japan's (BoJ) meeting. Despite warning from Finance Minister Satsuki Katayama about possible intervention to curb excessive JPY weakness, spot prices remain steady around 157.85 in the Asian session. Katayama reiterated the government's readiness to take action against disorderly JPY depreciation amid uncertainty over the timing of the next BoJ rate hike.

Japan's interest rate differential with major economies exacerbates the JPY's lower yield, further benefiting the USD/JPY pair. Meanwhile, Middle East peace talks divert attention from the USD's safe-haven appeal, with Iran and Qatari mediators engaging in discussions aimed at ending the US-Israeli conflict. President Trump expresses optimism about the negotiations, though he has not ruled out military action post the November midterm elections.

Iran's Supreme Leader orders military commanders to prepare for renewed confrontation with the US and Israel. Geopolitical risks from ongoing Ukrainian attacks on Russian oil refineries and expectations of a Fed rate hike further support USD bulls. The CME Group's FedWatch Tool indicates a 75% probability of a Fed rate increase in December.

The USD/JPY pair faces resistance near the 23.6% Fibonacci retracement level at 157.80, with potential further upside toward the 158.34 zone, while support is seen at the 23.6% Fibonacci level at 157.80, followed by the 38.2% and 50.0% retracement levels.