The Japanese Yen (JPY) remains weak against a strong US Dollar (USD) during the early European session on Monday, hovering near a nine-month low reached last week. Japan’s economy shrank by 0.4% in the July-September period, marking its first contraction in six quarters. Though worse-than-expected, the data dampens expectations for a Bank of Japan (BoJ) rate hike. Meanwhile, the USD benefits from diminishing expectations of a US Federal Reserve rate cut in December, keeping the USD/JPY pair above the 154.45-154.50 level.
Concerns over potential Japanese market intervention to support the Yen alongside geopolitical tensions with China may help limit JPY losses. Japanese authorities have issued warnings about currency movements, further limiting aggressive JPY selling. The US nonfarm payrolls report and FOMC meeting minutes, delayed due to the government shutdown, are key upcoming events. These could impact future USD/JPY movements.
Technical Overview
Technically, the USD/JPY seems poised for gains above the 155.00 mark if momentum continues. However, if it falls below the 154.00 support, it may attract new buyers around the 153.60-153.50 area. The USD is the world’s most traded currency, with policy decisions by the US Federal Reserve influencing its value depending on interest rate adjustments. Factors like quantitative easing and qualitative tightening also play roles in its valuation.
Based on the current economic data as of November 17, 2025, the policy split between the US and Japan continues to favor a stronger dollar against the yen. Japan’s economy just contracted for the first time in six quarters, shrinking by 0.4% in the third quarter. This weak data, combined with Prime Minister Takaichi’s push for more stimulus, signals the Bank of Japan is unlikely to raise interest rates anytime soon.
We see this dovish stance reinforced by the latest inflation figures from Japan. The Tokyo Core CPI, a leading indicator for nationwide prices, recently slowed to 2.5% in October 2025, down from a peak of over 4% we saw back in 2023. This decline in price pressure gives the Bank of Japan plenty of room to maintain its ultra-loose monetary policy, which keeps downward pressure on the yen. This makes shorting the JPY an attractive underlying theme.
Meanwhile, the US Federal Reserve appears to be holding firm, reducing the chances of another rate cut in December. Recent US inflation data from last week showed the Consumer Price Index was stickier than expected at 3.4%, giving policymakers reason to pause. This interest rate differential is a powerful driver keeping the USD/JPY pair elevated.
Watch for Intervention Risks
However, we must be extremely cautious as the USD/JPY pair approaches the 155.00 level. We remember well that Japanese authorities physically intervened in the market to strengthen the yen when the pair traded above 151.00 back in late 2022. The recent verbal warnings from Finance Minister Katayama are not idle threats and suggest intervention risk is now very high.
For derivative traders, this means outright long positions in USD/JPY futures are risky due to the potential for a sudden, sharp drop. A better strategy would be to buy USD/JPY call options to capture further upside while strictly defining your maximum loss. This protects you if the Ministry of Finance decides to act and sell dollars.
All eyes should now be on the delayed US Nonfarm Payrolls report for October, which is due this week. The report will be the first major piece of data reflecting the economic impact of the recent lengthy government shutdown. A significantly weaker-than-expected number could quickly shift sentiment against the dollar and trigger a sell-off in USD/JPY.
Technically, the key level to watch on the downside is the 153.00 mark. A decisive break below this point would suggest the bullish momentum has faded and could shift the near-term bias to the bears. Until then, the strategy is to look for buying opportunities on dips, but with a clear eye on the exit.
