## The Japanese Yen Falls to 9-Month Low as Central Bank Rate Hike Expectations Are "Cold-Shouldered"

Last week, Asian markets experienced a key turning point—the yen continued to be under pressure at the start of a new week, hovering near a nine-month low. Despite Japan's Q3 GDP data outperforming the market’s worst expectations, yen bulls' enthusiasm was noticeably lacking. Meanwhile, the shrinking expectations of a Fed rate cut in December provided strong support for the US dollar, with USD/JPY finding a stable footing above the mid-154.00 level.

## Weak Economic Data Dampens Confidence in Bank of Japan Rate Hike

Data released by Japan’s Cabinet Office on Monday revealed the country’s economic difficulties. The economy contracted by 0.4% quarter-on-quarter in Q3, marking the first decline in six quarters; year-on-year, it fell by 1.8%, sharply contrasting with the 2.3% growth in the previous quarter. Although the contraction was not as severe as the market’s most pessimistic forecasts, the ongoing slowdown in economic momentum is enough to raise doubts among investors about the likelihood of a near-term rate hike by the Bank of Japan.

The government led by Prime Minister Fumio Kishida is planning a new round of fiscal stimulus to ease the cost of living for citizens. Its statements regarding fiscal targets suggest future spending will remain flexible—directly weakening market expectations of a quick tightening policy by the Bank of Japan. Further geopolitical risks have also heightened doubts about the yen’s safe-haven appeal.

## Central Bank Officials Speak Intensively, Yen Remains Under Pressure

Japan’s Finance Minister Shunichi Suzuki emphasized last week that he will closely monitor currency market movements, aiming to prevent excessive yen depreciation through verbal intervention. Economic Minister Shunichi Kamei also warned on Friday that further yen declines could increase inflationary pressures by raising import costs. While these official statements impose some constraints on yen bears, they have not been able to reverse the overall downward trend.

In contrast, Federal Reserve policymakers have issued more cautious signals amid a lack of clear economic momentum, leading to a decline in market expectations for a further rate cut in December. This policy divergence further consolidates the dollar’s strength relative to the yen.

## Technical Outlook Indicates Risks, 155.00 Is a Key Level

From the 4-hour chart, the rebound from the support level at 153.60 last week performed well, coinciding with the 100-period simple moving average. Closing above the resistance zone of 154.45-154.50 on Friday created positive technical conditions for USD/JPY bulls. The daily oscillators remain in normal ranges, well away from overbought territory.

If bulls can break through and hold above the psychological level of 155.00, further gains toward the intermediate resistance at 155.60-155.65 could be possible, with the ultimate target around 156.00. Conversely, a drop below 154.00 may attract buyers again, with the 153.60-153.50 zone providing effective support. If this support is broken, the next line of defense is at the 153.00 level, which is a key point for short-term trend reversal. A decisive breach of this level could significantly increase the likelihood of a decline toward the 152.15-152.10 zone.

## Traders Should Watch for Policy Changes and Data Surprises

Investors should remain vigilant about the potential for unpredictable currency interventions by Japanese authorities. Meanwhile, market focus has shifted to Thursday’s (delayed) US non-farm payrolls, FOMC minutes, and speeches by Federal Reserve officials—these economic data and policy signals are expected to provide new momentum for the dollar. In the current environment where macro liquidity fluctuations are increasingly affecting the interaction between cryptocurrencies like Bitcoin traded against USD and traditional forex markets, attention should also be paid to these dynamics. The ongoing upward trend of USD/JPY over the past month warrants cautious trading, as excessive one-sided bets carry the risk of correction.