Japanese Yen Forecast: USD/JPY Tests Intervention Zone on BoJ Caution

Markets remain on edge as USD/JPY hit the yen intervention zone of 155-160 on Wednesday, November 12, rising to a nine-month high of 155.044. An uncertain Bank of Japan policy outlook and the US government reopening collided, extending USD/JPY’s winning streak to four sessions.

Despite a pullback on Thursday, November 13, the USD/JPY pair has gained 1.2% since the BoJ’s October rate decision and its softer inflation forecast for H1 2026. The central bank’s Summary of Opinions added to the uncertainty over the timeline for a rate hike. Policymakers were divided on tariffs, yen weakness, wages, and, crucially, monetary policy.

Given the BoJ’s expectation of cooling inflation, leading inflation indicators failed to increase the chances of a rate hike.

Japanese Producer Prices Beat Forecasts

On Wednesday, November 13, Japanese producer prices faced scrutiny, rising 2.7% year-on-year (YoY) in October, down from 2.8% in September. Economists expected producer prices to increase 2.5% YoY.

Lower producer prices suggested cooling demand and potentially softer consumer prices. Producers typically pass cost changes on to consumers.

Notably, producer prices slipped YoY despite USD/JPY surging 4.2% in October. A weaker yen typically raises producer prices through higher import prices, another key focal point for the BoJ. However, the BoJ is likely to place more weight on November’s data, as producer prices typically lag movements in import prices.

Furthermore, given the competing forces between yen weakness and import prices, October’s data is unlikely to incentivize cautious policymakers to turn hawkish. USD/JPY briefly dropped to 154.690 before climbing to a session high of 155.017 after the release of the data. The weaker yen reflected market reaction to the data and sentiment toward the BoJ rate path.

Ongoing uncertainty surrounding BoJ policy could add further pressure on the yen, with Prime Minister Sanae Takaichi’s expansionary fiscal and ultra-loose policy views reinforcing the headwinds.

Government–BoJ Coordination in Focus

Prime Minister Takaichi reportedly called for regular reports from the BoJ on November 12. She also stated:

“It is important that appropriate monetary policy management be conducted to achieve both strong economic growth and stable price increases going forward. The government and the Bank of Japan will continue to work together to develop the national economy.”

The USD/JPY outlook is bullish, given Prime Minister Takaichi’s fiscal stimulus plans and monetary policy stance. However, intervention threats could limit the upside, with 155-160 the Japanese government’s likely yen intervention zone.

USD/JPY has gained 5% since Prime Minister Takaichi won the Liberal Democratic Party election in October. However, two intervention threats have kept USD/JPY back from stronger gains.

This mix of economic resilience and policy divergence has traders questioning whether intervention looms before year-end.

US Economic Data and the Fed Outlook

While markets speculate about yen interventions and the BoJ’s rate path, US data and Fed speakers could influence US dollar demand later on Friday.

US producer prices and retail sales figures are set for release. Barring further delays to report releases, the two data sets will give key insights into inflation and consumption.

An uptick in producer prices could further temper bets on a December Fed rate cut, boosting demand for the US dollar. Meanwhile, weaker retail sales, likely because of the shutdown, combined with rising producer prices, could fuel stagflation fears.

With the Fed placing greater emphasis on inflation, higher producer prices would point to a less dovish stance, supporting a potential USD/JPY return to 155. Markets have cut expectations of a December rate cut in recent sessions, contributing to the USD/JPY return to 155.

According to the CME FedWatch Tool, the probability of a Fed rate cut in December has tumbled from 69.6% on November 6 to 50.7% on November 13.

Despite near-term strength, the broader outlook remains bearish because narrowing rate differentials could shift momentum in favor of the yen. The Fed remains on a dovish rate path, while the BoJ continues to keep a rate hike on the table. Additionally, markets may speculate about a shift in the Fed’s focus from inflation to supporting the economy, which could trigger US dollar weakness.

The key question now is whether markets buy into the Fed prioritizing inflation.

USD/JPY Scenarios: Diverging Monetary Policies

• Bearish USD/JPY Scenario: Hawkish BoJ rhetoric, intervention threats, weak US data, and dovish Fed comments could drag USD/JPY toward 153.
• Bullish USD/JPY Scenario: Dovish BoJ cues, rising US producer prices, and hawkish Fed chatter 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.
• Intervention threats.
• US data.
• Fed speakers.

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