The Japanese yen remains under heavy selling pressure, with Bank of America (BofA) reaffirming its bearish outlook as USD/JPY hovers near key resistance levels.
According to BofA analysts, the Bank of Japan’s (BoJ) decision to hold interest rates steady during its October policy meeting has deepened downside risks for the yen. With more than a month before the next policy review in December, both economic and political uncertainties continue to weigh on sentiment.
Cautious BoJ and Political Factors Add to Yen Pressure
BofA notes that the BoJ’s conservative approach to tightening policy remains a key drag on the yen. At the same time, Prime Minister Sanae Takaichi’s apparent preference for maintaining accommodative monetary conditions further undermines the currency’s strength.
Analysts also highlight persistent fiscal and political uncertainties, as well as ongoing capital outflows, which continue to keep Japan’s basic balance of payments in deficit.
Market Expectations and Intervention Risk
While markets still anticipate Federal Reserve rate cuts and potential BoJ rate hikes over the next few months, BofA warns that the likelihood of convergence between the two central banks’ policies is higher than many expect.
As USD/JPY edges closer to the 155 level, the Japanese Ministry of Finance (MoF) may come under mounting pressure to intervene in the currency market to stem further depreciation.
However, BofA’s analysis suggests that authorities are unlikely to act immediately, estimating that the pair could rise toward 158 before prompting a significant policy response — unless a sharp spike in speculative positioning or volatility accelerates market moves.