BoJ Policy Path Takes Center Stage for USD/JPY

The focus of market attention has shifted from intervention risks to the Bank of Japan's policy path, according to Scotiabank. The Japanese yen's near-term direction is increasingly tied to the central bank's next moves.

Scotiabank's strategists point out that the Ministry of Finance's earlier intervention threats have faded from the spotlight, allowing fundamental drivers to take precedence. The recent stabilization of the yen reflects growing expectations that the BoJ will continue normalizing monetary policy, even as the timing of the next rate hike remains uncertain.

The key technical levels for USD/JPY are crucial in defining the pair's next move. Scotiabank highlights critical support and resistance zones, with a near-term floor at 153.00 backed by the 200-day moving average. A break below this level could open the door to deeper corrections toward 150.00.

A sustained move above the 157.50 resistance would require a significant reassessment of BoJ policy expectations, which currently point to a gradual path of normalization.