Markets eye BoJ rate path beyond December hike – OCBC

USD/JPY remained largely unchanged as markets await further guidance from the BoJ, with a December hike already largely priced in. Pair was last seen at 155.06 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

JPY recovery limited without fiscal prudence, Softer USD

“USD/JPY traded little changed in absence of fresh catalyst. In comments made in parliament this morning, Governor Ueda said that BoJ can only estimate neutral rate with wide range and cannot specify where terminal rate will be. He reiterated that policy setting remains accommodative while economic package to have positive impact on real economy.”

“Markets have already priced 80% probability of December hike and the key question is what comes next- if this is a one hike and another long wait. Any meaningful recovery in JPY would require not just the BoJ to follow through with stronger guidance but also for policymakers to demonstrate fiscal prudence while a softer USD, US rates environment would be supportive.”

“Daily momentum is mild bearish while RSI slipped. Risks modestly skewed to the downside. Key support at 154.40 (76.4% fibo) and 151.60 (61.8% fibo retracement of 2025 high to low, 50 DMA). Resistance at 156.70, 157.90 and 158.87 (previous high in 2025).”