USD/JPY: Dollar Falls to Near ¥155 After Rate-Hike Comments Trigger Sharp Rally in Yen

Greenback erased half a percent, or about 90 pips, from its valuation against its Asian peer. What happens next?

💴 Yen Rockets After BoJ Hike Hints

• The USDJPY tumbled toward ¥155 after BoJ Governor Kazuo Ueda signaled a solid rate-hike possibility, telling business leaders the bank would weigh the “pros and cons” of tightening at its next meeting.
• The yen’s surge erased roughly 90 pips from the dollar, reflecting just how sensitive FX markets are to even mild hawkish language from Tokyo after decades of ultra-loose policy.
• Ueda’s comments also knocked the Nikkei lower by about 2% and pushed Japanese government bond yields to 17-year highs, as traders scrambled to reprice Japan’s entire risk landscape.

⚠️ Policy Uncertainty Keeps Traders on Edge

• Markets have been obsessing over the yen for weeks amid mounting uncertainty about the timing of the BoJ’s next move and concerns around fiscal strategy under Prime Minister Sanae Takaichi.
• Verbal interventions from Japanese officials have repeatedly warned against yen weakness, leaving traders wary of a surprise FX shock, especially when the dollar-yen inches toward historically elevated levels.
• With a potential hike finally in play, positioning is shifting fast as traders move away from one-way “short yen” bets and start considering a longer-term trend reversal.

📅 December Data Could Shape the Path

• The BoJ meets on Dec. 19, but global macro fireworks arrive earlier: the Fed’s preferred inflation gauge hits Dec. 5, followed by CPI on Dec. 10 – both critical for the dollar side of the pair.
• The Fed’s rate decision on Dec. 10 may add another layer of volatility. A dovish tone could amplify yen strength, while a hawkish surprise might cushion the dollar’s fall.
• The US jobs report on Dec. 16 rounds out the month’s trio of catalysts. Until then, the currency duo may stay jumpy as traders navigate a rare moment: Japan hinting at higher rates.