No significant events are expected today.

The Federal Reserve’s resolute stance continues to boost US bond yields and undermine the yen’s exchange rate.

A stronger-than-expected Japanese consumer price index leaves room for a potential Bank of Japan rate hike in 2025.

The Japanese yen (JPY) extends its two-week downward trend, hitting a five-month low against the US dollar during the Asian session on Friday. On Thursday, the Bank of Japan (BoJ) nearly unanimously kept rates unchanged and provided a cautious forecast for 2025 amid sluggish economic growth, adding pressure on the yen. Additionally, the growing yield differential between US and Japanese bonds is driving capital outflows from the lower-yielding yen.

Meanwhile, the Federal Reserve’s announcement that it will slow the pace of rate cuts in 2025 is helping the US dollar (USD) maintain its strong weekly rally to a two-year high. This further fuels the significant rise of the USD/JPY pair toward the 158.00 mark. However, data showing that Japan’s consumer price index (CPI) in November grew slightly more than expected, which may prompt the Bank of Japan to raise interest rates in early 2025, provides some relief for JPY bulls.

Recommendations: Trading is primarily focused on Buy orders from the current price levels.