Yen Holds Firm as BoJ Minutes Offset Soft Dollar & Fed

Key Moments

USD/JPY moved lower for a second consecutive session, pressured by a stronger JPY and ongoing U.S. Dollar selling.
BoJ September Minutes reinforced expectations for a potential December rate hike, supporting the Yen.
Markets focused on the upcoming U.S. NFP release, with Fed hike expectations still pointing to a possible December move.

Yen Gains as BoJ Signals Willingness to Tighten

The USD/JPY pair came under renewed selling pressure on Thursday, failing to build on the prior session’s rebound from the 157.40 area, which marked the weekly low. For the second straight day, the pair attracted sellers, with bearish participants looking for a clear break below the 158.00 level before committing to deeper downside positions.

Fresh support for the Japanese Yen emerged after the release of the Bank of Japan’s September meeting Minutes. The document showed that policymakers agreed it was appropriate for the central bank to continue lifting the policy interest rate and adjust the degree of monetary easing. This stance reinforced market expectations for a rate increase in December and offered the JPY a modest boost. Combined with a prevailing bearish tone in the U.S. Dollar, this pushed USD/JPY lower.

U.S. Dollar Pressured by Politics, Oil, and Yields

The broader U.S. Dollar environment remained weak amid easing inflation concerns and falling U.S. bond yields. Political developments added to the pressure. The U.S. midterm elections resulted in Democrats gaining control of both chambers of Congress, heightening fears of fiscal gridlock and constraints on government spending.

At the same time, Democratic leaders “vowed to push for an end to the Iran war,” leading traders to remove some geopolitical risk premium from markets. This shift contributed to an overnight slump in crude oil prices, which in turn helped temper inflation worries. Lower inflation fears fed into a further decline in U.S. yields, keeping the Dollar on the defensive and weighing on spot USD/JPY levels.

Fed Rate Expectations Provide a Floor for the Dollar

Despite the softer Dollar backdrop, expectations for more tightening by the U.S. Federal Reserve continued to provide some underlying support. Data from the CME Group’s FedWatch Tool indicated that market participants were pricing in over an 80% probability that the Fed would raise borrowing costs again in December.

These expectations were bolstered by the latest U.S. ADP report released on Wednesday, which showed that private-sector employment increased by 86,000 in October 2026, surpassing forecasts. The combination of strong Fed hike odds and better-than-expected labor data helped limit deeper losses in the Dollar and, by extension, in USD/JPY.

Market Focus Turns to U.S. NFP and Potential Japanese Intervention

Attention now centers on the upcoming U.S. Nonfarm Payrolls report, scheduled for release on Friday, which is anticipated to be a key driver of U.S. Dollar demand. In the run-up to that event, any rebound attempts in USD/JPY are seen as vulnerable, as traders remain alert to the possibility of Japanese authorities acting to support the domestic currency.

Given these cross-currents, market participants are cautious about initiating new directional positions. Many see it as prudent to wait for a clear breakout from the current short-term range before adopting a stronger bullish or bearish stance on the pair.

Technical Picture: Bias Tilts Mildly Bearish

From a technical standpoint, USD/JPY retains a slightly bearish near-term tone after repeatedly failing to extend gains beyond the 200-day Simple Moving Average (SMA), situated at 158.65. This persistent inability to clear the SMA suggests that upside momentum remains constrained for now, leaving rallies susceptible to selling while price holds below that threshold.

A daily close above 158.65 would be required to alleviate the current downside bias and pave the way for a more durable recovery. On the downside, the recent swing low near 157.40 is acting as initial support, followed by the 157.00 level and the lower edge of the prevailing trading range around 156.65. A decisive move below 156.65 would likely be interpreted as a fresh bearish signal and could set up a more substantial depreciating phase for the pair.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

U.S. Dollar Performance Over the Last 7 Days

The following table summarizes the percentage change of the U.S. Dollar against major currencies over the last 7 days. According to the data, the U.S. Dollar showed its strongest relative performance versus the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.88%	-1.19%	0.16%	-0.29%	0.50%	-0.27%	-1.63%
EUR	0.88%		-0.30%	1.03%	0.59%	1.38%	0.64%	-0.74%
GBP	1.19%	0.30%		1.39%	0.90%	1.68%	0.95%	-0.45%
JPY	-0.16%	-1.03%	-1.39%		-0.46%	0.31%	-0.43%	-1.80%
CAD	0.29%	-0.59%	-0.90%	0.46%		0.80%	0.04%	-1.33%
AUD	-0.50%	-1.38%	-1.68%	-0.31%	-0.80%		-0.70%	-2.11%
NZD	0.27%	-0.64%	-0.95%	0.43%	-0.04%	0.70%		-1.35%
CHF	1.63%	0.74%	0.45%	1.80%	1.33%	2.11%	1.35%

The heat map is interpreted by taking the base currency from the left-hand column and the quote currency from the top row. For instance, selecting the U.S. Dollar as the base and moving horizontally to the Japanese Yen cell gives the percentage move in USD (base)/JPY (quote).