Japanese Yen Forecast: Intervention Risks Ahead of US Jobs, PMI Data

As USD/JPY teeters near an eight-month low, traders brace for potential Tokyo intervention amid shifting Fed rate expectations.

Japanese Finance Minister Satsuki Katayama raised the threat of yen intervention on Tuesday, November 4, reportedly stating:

“I’m seeing one-sided and rapid moves in the currency market. There’s no change in our stance of assessing developments with a high sense of urgency.”

The comments came after USD/JPY climbed to an eight-month high of 154.483 in early trading on November 4. Japan’s Finance Minister had previously warned of yen intervention on October 28, pushing the pair briefly to 151.759.

Recent warnings have alerted markets to potential yen intervention, yet USD/JPY continues to trade near its eight-month high.

Interventions or Rate Hikes?

David Scutt, Senior Market Analyst at Stone X, commented on Katayama’s latest warning, stating:

“Yen movements have been orderly and reflect fundamentals. If they want a stronger yen, give Ueda a nudge to get on with it.”

Impact of US-Japan Interest Rate Differentials

Expectations of US-Japan interest rate differentials narrowing sharply in favor of the yen faded in recent sessions, lifting USD/JPY. Fed Chair Powell downplayed the chances of a rate cut in December, citing concerns over tariff-fueled inflation, boosting demand for the US dollar. Meanwhile, the Bank of Japan signaled a potential hold on further rate hikes to assess the effect of tariffs on wages, inflation, and the broader economy.

The less hawkish BoJ and less dovish Fed continue to cushion the downside for USD/JPY, increasing the risk of yen intervention.

Yen intervention threats may intensify as USD/JPY moves toward 155. However, 160 could be the flash point, given the last intervention around that level in mid-2024.

Japanese Prime Minister Sanae Takaichi added to the market uncertainty, stating that price stability, coupled with wage gains, had yet to be achieved. Crucially, Prime Minister Takaichi’s comments reinforced the BoJ’s softer inflation outlook through H1 2026. Notably, Takaichi’s stance could pressure the BoJ to stand pat in December, potentially weakening the yen.

While the medium-term outlook remains bearish, uncertainty about the timing of a Fed rate cut could limit the near-term downside, barring a market event. Meanwhile, yen intervention threats would likely cap the USD/JPY pair’s upside at 155.

US Economic Data and Fed Outlook

While traders consider intervention threats and the chances of a BoJ rate hike, US economic indicators could trigger USD/JPY price volatility on Wednesday, November 5. Two key economic reports may affect expectations for a Fed rate cut in December.

ADP Employment Report

Economists forecast the ADP to report employment to rise by 24k in October after falling by 32k in September. A larger-than-expected increase may temper bets on further policy easing in December, potentially sending USD/JPY toward 155.

On the other hand, an unexpected fall in employment could overshadow concerns about inflation and raise bets on a December cut. A more dovish Fed rate path may send USD/JPY toward 150.

ISM Services PMI

While labor market data will influence the Fed’s rate path, services sector data could have a greater impact, given that the sector accounts for around 80% of US GDP.

Economists expect the ISM Services PMI to rise from 50.0 in September to 50.7 in October. A higher PMI reading, combined with rising prices, could support a more hawkish Fed policy stance, sending USD/JPY toward 155. Conversely, a drop below the 50 neutral level and softer services sector inflation may revive expectations of a December cut. A more dovish Fed rate path could push the pair below 153, exposing the 150 level.

Beyond the data, FOMC members’ speeches also require consideration, given the shifting sentiment toward the Fed’s rate path.

USD/JPY Scenarios: Diverging Monetary Policies

• Bearish USD/JPY Scenario: Hawkish BoJ comments, intervention threats, weak US data, and dovish Fed guidance could push USD/JPY toward 150.
• Bullish USD/JPY Scenario: Dovish BoJ chatter, strong US data, and hawkish Fed rhetoric could send USD/JPY toward 155.

Read the full USD/JPY forecast, including chart setups and trade ideas.

Key Market Drivers to Watch Today:

• Bank of Japan commentary.
• Japanese government intervention warnings.
• ISM Services PMI and ADP labor market data.
• Developments on Capitol Hill.
• Fed speakers.

For more in-depth analysis, review today’s USD/JPY trading setups in our latest reports and consult the economic calendar.