BoJ Policy Path Dominates Yen's Near-Term Direction

The Japanese yen's near-term direction is closely tied to the Bank of Japan's policy trajectory. Scotiabank notes that market attention has shifted away from intervention risks and toward the central bank's next moves.

According to Scotiabank, the yen's recent stabilization reflects growing expectations that the BoJ will continue normalizing monetary policy. This shift comes after a period of heightened volatility in USD/JPY, which saw the pair test multi-decade highs before retreating.

The bank highlights critical support and resistance zones for USD/JPY. A break below 153.00 could open the door to deeper corrections toward 150.00, while a sustained move above 157.50 would require a significant reassessment of BoJ policy expectations.