Japanese Yen Weekly Forecast: Fed, BoJ Divergence Drives Yen Moves

Japanese government intervention threats collided with US labor market data, which signaled a surge in job cuts, sending USD/JPY into the red. USD/JPY fell 0.38% to 153.412 in the reporting week ending Friday, November 7. Slowing Japanese wage growth and manufacturing sector woes capped the yen’s gains. Meanwhile, US inflation expectations remained elevated, cushioning the downside for the greenback.

Japanese Finance Minister Satsuki Katayama warned:

“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.”

Her comments underscored concerns about yen weakness raising import costs and cutting household purchasing power. Notably, USD/JPY dropped back from an eight-month high of 154.483. Intervention warnings from Finance Minister Satsuki Katayama are likely to cap USD/JPY gains barring a shift in sentiment toward the US economy and the Fed rate path.

Looking ahead, the US Senate impasse and key economic indicators will influence the BoJ and the Fed’s policy stances. Furthermore, intervention threats and growing concerns about the global demand environment may also affect trends, given China’s reported export slump.

BoJ Summary of Opinions: Will Policymakers Support a Rate Hike?

On Monday, November 10, the Bank of Japan’s Summary of Opinions could be pivotal for the Japanese yen. The BoJ kept interest rates at 0.5% on October 30 and signaled a softer inflation outlook through H1 2026, cooling bets on a December rate hike.

Notably, two policymakers continued to dissent, favoring an interest rate hike. The Summary of Opinions will give insights into the conditions needed to tighten monetary policy. Heightened concerns that yen weakness is lifting import prices may increase the likelihood of a near-term rate hike, pushing USD/JPY lower.

On the other hand, growing concerns over US tariffs affecting demand for Japanese goods, price margins, and the labor market could signal a policy status quo, sending USD/JPY higher. Notably, Trump’s tariffs are currently under review by the US Supreme Court.

Japanese Producer Prices May Steer BoJ Tone

Although the Summary of Opinions will be key, Japanese producer prices will draw the BoJ’s attention on Thursday, November 13. Economists expect producer prices to rise 2.5% year-on-year in October, down from 2.7% in September.

A lower reading could signal a softer inflation outlook, supporting a more dovish BoJ rate path. Producers adjust prices subject to demand, passing on cost savings or higher prices to consumers.

Rising producer prices would indicate an upswing in consumer prices, potentially increasing expectations of a December BoJ rate hike.

Given the impact of US tariffs and weakening global trade, a softer print appears more likely, aligning with the BoJ’s inflation outlook for H1 2026.

Bank of Japan Speeches and Intervention Risk

Beyond the economic data and the BoJ’s Summary of Opinions, traders should closely monitor BoJ speeches. Policymakers could deliver hawkish signals amid concerns over yen weakness and import price trends.

However, policymakers’ views on the 2026 wage outlook will also be crucial. Inflation continued to outpace wage growth in September, complicating the BoJ’s policy stance. Real wages fell 1.4% year-on-year in September, while the so-called core core inflation rate eased from 3.3% in August to 3.0% in September.

BoJ Governor Kazuo Ueda has highlighted the need for more data and early indications from 2026 shunto wage negotiations. Japan’s largest labor union, Rengo, is reportedly planning to demand a 5% wage hike in the 2026 shunto spring negotiations. UA Zensen, made up of unions in Japan’s retail, textile, and other industries, reportedly announced plans to demand a 6% wage hike.

Support for 5-6% wage increases could fuel bets on a near-term BoJ rate hike, lifting demand for the yen. While the proposed 2026 wage hikes are not immediate, expectations could still affect market pricing in the near term.

Even as the BoJ considers wage growth, import prices, and demand, the Japanese government will likely continue tracking USD/JPY trends. A move toward last week’s high of 154.483 could heighten intervention risk, potentially triggering a drop toward 150.

Follow our real-time updates to stay ahead of USD/JPY market developments.

USD/JPY Outlook: Economic Indicators and the BoJ

• Bullish Yen Scenario: Strong Japanese data, support for 5% wage hikes in 2026, intervention threats, or a hawkish BoJ rhetoric. These scenarios could push USD/JPY toward 150.
• Bearish Yen Scenario: Weak data, low support for 5% wage hikes, or a dovish BoJ commentary. These scenarios may drive the pair toward 155.

Although Japanese economic data, BoJ forward guidance, and intervention jitters will influence yen demand, traders should closely track updates from Capitol Hill, US data, and Fed chatter.

Labor Market Data, the ISM Services PMI, the Fed, and Capitol Hill in Focus

As Japan’s policy direction remains uncertain, US data will set the tone for cross-market sentiment. The US government shutdown dragged into its 39th day on Sunday, November 9, further delaying crucial labor market and inflation reports.

A continued Senate impasse through the week would leave traders with Fed speakers and Challenger job cuts to consider. Assuming the government reopens, key data releases for the week ahead include:

• ADP Employment Change Weekly (November 11).
• US Annual Inflation Rate: (November 13): Economists forecast the inflation rate to rise from 3% in September to 3.1% in October.
• Initial Jobless Claims (November 13): Expected to rise from 218k week ending September 20 to 260k week ending November 8.
• Retail Sales (November 14): Expected to increase 0.2% month-on-month in October after rising 0.6% in August.
• Producer Prices (November 14): Forecast to rise 2.7% in October, up from 2.6% in August.

US Data and Fed Speakers to Fuel US Dollar Trends

Softer-than-expected US inflation, rising job cuts, increasing initial jobless claims, and weaker retail sales could fuel bets on a December Fed rate cut. A more dovish Fed rate path could push USD/JPY toward 150 amid lingering expectations of a BoJ rate hike.

Hotter-than-expected US inflation, lower job cuts, falling jobless claims, and stronger retail sales could cool bets on a December Fed rate cut. A more hawkish Fed policy stance may drive USD/JPY toward 155.

Beyond the data, traders should closely monitor FOMC members’ speeches for views on the economy, inflation, and the timing of further rate cuts. FOMC members Michael Barr, Stephen Miran, John Williams, Anna Paulson, Christopher Waller, Beth Hammack, Jeffrey Schmid, and Lorie Logan are due to speak.

Short-term Forecast:

• Bullish US Dollar Scenario: Strong US economic data and hawkish Fed rhetoric may send USD/JPY toward 155.
• Bearish US Dollar Scenario: Weak US data and dovish Fed commentary could push USD/JPY toward 150.

USD/JPY Price Action

Daily Chart

On the daily chart, USD/JPY remained above the 50- and 200-day Exponential Moving Averages (EMAs), reaffirming a bullish bias.

A break above the November 2025 high of 154.483 could open the door to testing 155 and the February 2025 high of 155.880. A sustained move through 155.880 may enable the bulls to target the 156.884 resistance level.

On the downside, a break below 153 could expose the 50-day EMA and the 150 psychological support level. If breached, 149.358 would be the next key support level.

Key Takeaway

The USD/JPY pair gave up some of October’s 4.2% gain last week. Economic data, intervention warnings, and the US government shutdown influenced sentiment.

This week’s data, central bank speeches, renewed intervention concerns, and US Senate votes will put USD/JPY in focus.

Consult our economic calendar for historical and upcoming data.