Important events today:

16.10 12:30 UTC: USD Producer Price Index

The Yen received a fresh catalyst from the Bank of Japan: Junko Koeda stated that the regulator should not exercise excessive caution regarding rate hikes when facing risks of accelerating inflation. According to her assessment, the neutral rate is noticeably above 1%. This supports expectations of further tightening, though a statement by an individual board member does not yet signify a consensus decision by the entire bank.

At the same time, falling US Treasury yields reduce the attractiveness of the Dollar in carry trade operations. Today’s risk-off sentiment is accompanied by purchases of US debt securities, meaning safe-haven demand does not automatically translate into Dollar strengthening. For USD/JPY, the primary factor remains the erosion of the Dollar’s yield advantage.

High US rates continue to act as a counterweight to the Yen, and strong data on US consumer spending and producer prices could invalidate the downside scenario for the pair. The risk of intervention by Japanese authorities is also taken into account, though new interventions are not the basis of this trade idea. As long as US yields decline and the Bank of Japan discusses further tightening, the priority remains with Yen strengthening.

Recommendations: SELL 157.95, SL 158.30, TP 157.15.