USD/JPY Price Today, Forecast and News: Yen Hovers Near 156.5 as Markets Brace for Fed Cut and BoJ Rate Hike

Tokyo / London – December 10, 2025 – The Japanese yen is trading near some of its weakest levels of the year against the US dollar as traders position for a rare “double feature” in monetary policy: a widely expected rate cut from the US Federal Reserve and a potential rate hike from the Bank of Japan (BoJ) next week.

Despite growing speculation that Japan is on the verge of another step away from ultra‑easy policy, the yen remains under pressure—kept weak by still‑wide interest‑rate differentials, elevated US yields and concerns over Japan’s fiscal path. ^[1]

USD/JPY price today: yen pinned in the mid‑156s

As of the afternoon in London on December 10, 2025, the mid‑market USD/JPY rate is around ¥156.4–156.7 per US dollar, according to real‑time data from Wise and recent Reuters spot quotes. ^[2]

Key price points:

Spot today: roughly ¥156.45–156.70 per USD
Move on the day: only a fraction of a percent, with X‑Rates data showing the pair up about 0.04% over the last 24 hours. ^[3]
One‑week range: Wise data show the dollar trading between about ¥155.1 and ¥156.9 over the past week, with the upper end touched on December 9. ^[4]
Six‑month context: The yen hit its weakest level in six months around ¥157.46 per dollar on November 21, while the strongest in that period was about ¥143.10 on June 13. The six‑month average sits near ¥149.4 per dollar. ^[5]

In other words, USD/JPY is trading close to its recent highs, and the yen is still a long way from the mid‑140s seen earlier this year.

Why is the yen still weak if the BoJ is about to hike?

On the surface, the story should be yen‑positive: Japan has finally exited negative rates and is preparing to tighten again, while the Fed is widely expected to cut. Reality is more complicated.

1. Rate differentials are narrowing—but still huge

The Federal Reserve cut its policy rate to a 3.75%–4.00% target range in late October. ^[6]
Markets and analysts now assign roughly 80–90% odds to another 25‑basis‑point cut at this week’s December FOMC meeting, which would take the range to about 3.50%–3.75%. ^[7]
The Bank of Japan, by contrast, only lifted its policy rate to around 0.5% in January 2025, the highest level since 2008, after years of negative rates and yield‑curve control. ^[8]

Even if the BoJ hikes to 0.75% next week—as many economists and traders now expect—the US‑Japan short‑term rate gap would still sit near 3 percentage points. ^[9]

That’s narrower than the extreme spreads seen in 2022–2023, but still wide enough to keep the yen attractive as a funding currency for global carry trades—a key reason the currency remains under pressure. ^[10]

2. Fiscal worries and politics muddy the BoJ story

A new Reuters interview with MUFG’s head of global markets, Hiroyuki Seki, highlights mounting market anxiety about Japan slipping into a “negative spiral”: if the BoJ doesn’t tighten enough while the government continues reflationary spending, a weak yen could keep pushing up import prices and inflation, forcing more painful adjustments later. ^[11]

Despite the narrowing rate gap with the US, MUFG notes that the yen has stayed weak around the ¥155–157 per dollarzone, in part because investors worry that Prime Minister Sanae Takaichi’s reflationist stance might constrain further BoJ tightening. ^[12]

3. Speculators are still betting against the yen

Bloomberg reporting shows that, even as odds of a December BoJ rate hike climbed, positioning among major institutional investors remains heavily skewed toward yen weakness. Citigroup’s proprietary “pain gauge” for the yen remains deeply negative, indicating that traders are still broadly short the currency. ^[13]

In simple terms: the BoJ is turning, but slowly, while:

US rates are still much higher, even if they’re peaking, and
Many investors are reluctant to abandon profitable yen‑funded carry trades until they’re forced to.

Central bank showdown: Fed ‘hawkish cut’ vs BoJ normalization

The Federal Reserve: cut now, debate later

Heading into today’s decision, markets are almost unanimously expecting a 25 bps Fed rate cut, but the big debate is about the tone and the updated dot plot of future rate projections. ^[14]

Key Fed angles for USD/JPY:

Hawkish cut: Analysts widely expect Chair Jerome Powell to pair a cut with guidance that further easing in 2026 will be slower than markets hoped, given still‑elevated inflation and surprisingly resilient US data. ^[15]
Data gaps: A recent US government shutdown delayed some key releases, leaving the Fed “flying partly blind” on fresh inflation and labour data—something FXEmpire highlights as a source of volatility risk for USD/JPY. ^[16]

For dollar‑yen, a hawkish cut could easily support the pair near or above current levels, particularly if the dots show fewer cuts than markets are pricing in for 2026.

Bank of Japan: from ultra‑loose to merely very loose

On the Japanese side, the story is one of gradual normalization:

The BoJ raised rates to 0.5% in January 2025 and has held there throughout the year, even as inflation stayed above its 2% target. ^[17]
Governor Kazuo Ueda has recently highlighted that long‑term Japanese government bond (JGB) yields have risen “somewhat rapidly”, with the 10‑year yield hitting an 18‑year high—one sign that markets are bracing for further tightening. ^[18]
Producer‑price data for November showed a 2.7% year‑on‑year increase, bolstering the case for a hike as cost pressures filter through the economy. ^[19]

Markets now price about a 90% probability that the BoJ will hike by 25 bps to 0.75% at its December 19 meeting, according to interviews with MUFG and broader rate‑market pricing. ^[20]

Ueda has stressed that the Bank is closely watching wage‑setting plans for the next fiscal year, implying that how aggressively the BoJ tightens in 2026 will depend heavily on wage growth and inflation expectations. ^[21]

Technical picture: USD/JPY at a pivotal zone

Even as the macro narrative remains dollar‑supportive, several analysts argue that USD/JPY is at an important technical juncture.

Key levels in focus

An OANDA/MarketPulse note on December 10 points out that:

USD/JPY has staged a five‑day rally from around ¥154.40 (the low on December 5) but is now losing upside momentum.
¥157.15 is flagged as a short‑term pivot resistance, where several technical factors converge.
A sustained break below ¥156.00—which aligns with the 20‑day moving average—could trigger a corrective move toward ¥155.35 and ¥154.40, with a deeper slide exposing the ¥153.70 area. ^[22]

FXEmpire’s daily analysis paints a similar picture:

On the daily chart, USD/JPY is still trading above its 50‑ and 200‑day exponential moving averages, suggesting short‑term bullish structure, but
A break below ¥155 and the 50‑day EMA would signal a potential trend reversal, opening the door toward ¥150and eventually lower levels if fundamentals continue to shift. ^[23]

At the same time, FXEmpire notes that official warnings about yen weakness and the risk of FX intervention are likely to cap upside around the November high near ¥157.9–158.0. ^[24]

In practical terms, the pair is stuck between strong fundamental dollar support and growing technical signs of exhaustion.

What the big banks and strategists expect for 2026

Despite the yen’s current weakness, a growing list of institutions expects USD/JPY to trend lower over the next 12–24 months.

Bank forecasts

MUFG Research (December FX outlook) projects USD/JPY falling from about 156 at the end of November to 150 by end‑Q1 2026, then gradually to 148 (Q2), 146 (Q3) and 144 (Q4)—a steady yen appreciation path as US rates ease and the BoJ tightens. ^[25]
ING’s FX team has a 152 target for USD/JPY at the end of 2025 and a 148 forecast for the end of 2026, arguing that BoJ hikes and political discomfort with a weak yen should slowly drag the pair lower. ^[26]
A recent Roic.ai summary of bank commentary notes that multiple houses now see the yen “poised to appreciate in 2026” as the BoJ lifts its policy rate toward 0.75%–1.0% while the Fed cuts, narrowing the rate gap. ^[27]
FXEmpire goes further in its scenario analysis, suggesting that a dovish Fed cutting more in 2026, combined with a BoJ hike next week and possible QE tweaks, could put USD/JPY on a path toward 130 over a 6–12‑month horizon, though this is contingent on how aggressive both central banks actually are. ^[28]

Investor surveys

It’s not just analysts. A Bank of America fund manager survey cited by Bloomberg in mid‑November found that about a third of global investors picked the yen as their top currency for 2026, expecting it to outperform after being one of the worst performers against the dollar this year. ^[29]

Taken together, the message is: short‑term, the trend is still yen‑negative; medium‑term, consensus is gradually shifting toward a stronger yen.

The carry trade: a trillion‑dollar risk hanging over USD/JPY

For two decades, the yen has been the quintessential funding currency for global carry trades: investors borrow cheaply in yen and invest in higher‑yielding assets abroad.

RSM’s “Market Minute” on December 10 emphasises that:

The normalization of Japanese rates is a potentially “large global event” that could surprise investors who have grown used to decades of ultra‑low Japanese yields.
As the Fed cuts and the BoJ hikes, the interest‑rate spread between US Treasuries and JGBs narrows, making the yen less attractive as a funding currency.
If yen valuations reverse and capital flows back into Japan, global risk assets—from equities to crypto—could feel the impact as carry trades are unwound. ^[30]

Earlier commentary from policy analysts has also warned that Japan’s previous negative‑rate regime encouraged very large yen‑funded positions in global markets; a sharp yen rebound could therefore trigger forced de‑risking and volatility across asset classes. ^[31]

For now, as RSM notes, the carry trade has largely held up—one reason the yen remains weak even as BoJ policy shifts. ^[32]

What to watch next for USD/JPY

For traders, corporates and investors watching USD/JPY, several catalysts over the coming days and months could shift the narrative:

Today’s FOMC decision and dot plot (December 10, 2025)
- Size of the cut (almost certainly 25 bps, but anything else would shock FX markets). ^[33]
- How many cuts the Fed now projects for 2026.
- Tone of Powell’s press conference: does he lean toward a short easing cycle (“hawkish cut”) or signal room for deeper cuts if growth slows?
BoJ policy meeting (December 18–19, 2025)
- Whether the BoJ actually hikes to 0.75% and how it guides on future moves. ^[34]
- Any hints on reducing JGB purchases or adjusting its approach to bond‑market volatility. ^[35]
Japanese wage and inflation data
- Spring wage negotiations and upcoming price forecasts will be crucial in determining how far the BoJ can go toward a 1.25%–1.5% terminal rate by mid‑2027, as MUFG’s Seki envisions. ^[36]
US data once the shutdown distortions fade
- Fresh inflation, labour‑market and growth data in early 2026 will either validate or challenge the market’s current assumption of gradual Fed easing, with direct implications for USD/JPY. ^[37]
Signals of FX intervention from Tokyo
- As USD/JPY approaches the 157–158 zone, traders grow more alert for verbal or actual intervention by Japan’s Ministry of Finance, especially if moves are rapid rather than gradual. ^[38]

Key takeaways

USD/JPY is trading near ¥156.5 today, close to its recent highs, with the yen still one of the weakest major currencies of 2025. ^[39]
Markets expect a 25 bps Fed cut today and a 25 bps BoJ hike next week, but even after that, the rate gap remains large, keeping yen‑funded carry trades attractive. ^[40]
Technical analysts see stiff resistance around ¥157.1–158.0 and warn that a break below ¥156–155 could signal the start of a more meaningful correction. ^[41]
Major banks including MUFG and ING now forecast gradual yen strength into 2026, with USD/JPY drifting toward the mid‑140s if the Fed cuts and BoJ hikes as expected. ^[42]
Investor surveys show the yen is increasingly viewed as a top 2026 FX pick, yet speculative positioning is still heavily short—creating the potential for sharp squeezes if the narrative flips. ^[43]

For now, USD/JPY sits at a crossroads: the short‑term story still favours a strong dollar and weak yen, but the medium‑term script is slowly being rewritten around BoJ normalization and an eventual unwind of the yen carry trade.

Disclaimer: This article is for informational and news purposes only and does not constitute investment advice or a recommendation to buy or sell any currency or financial instrument.