USD/JPY Nears 159! Fed Signals & BoJ Caution Shape Forex Moves

The Japanese Yen (JPY) remains weak against the US Dollar (USD), hovering near a multi month low during the Asian session on Friday. Japan’s real household spending fell for the fourth month in November, signalling economic challenges. This adds pressure on the Bank of Japan (BoJ) to stay cautious about raising interest rates, further weakening the JPY.

On the other hand, the Federal Reserve's (Fed) hawkish stance on gradually slowing rate cuts in 2025 supports higher US Treasury yields, boosting the USD. This dynamic keeps USD/JPY trading strong. However, traders are waiting for the US Non farm Payrolls (NFP) report for clearer market direction.

Key Factors:

• Japan’s inflation adjusted household spending dropped by 0.4% in November, reflecting rising economic pressure.

• The BoJ is cautious about interest rate hikes, with some analysts predicting action in early 2025.

• US Treasury bond yields remain elevated due to the Fed's hawkish signals, supporting USD strength.

Watch for the release of US Nonfarm Payrolls today – a key market driver! Traders can leverage USD/JPY opportunities with tight spreads and fast execution.

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