BOJ and the Government Struggle to Stabilize the Exchange Rate Through Coordination, and the Japan-U.S. Interest Rate Differential Will Continue to Drive Market Direction

Forex

Summary:

The Bank of Japan governor signaled that the path for interest rate hikes remains unchanged, yet the yen struggles to attract buyers; under the uncertainty surrounding the central bank, the yen appears highly vulnerable.

BUY USDJPY

Close Time

CLOSED

155.798

Entry Price

161.060

152.500

155.419 +0.074 +0.05%

49.0

Pips

Loss

152.500

155.308

Exit Price

155.798

Entry Price

161.060

Fundamentals

Bank of Japan Governor Kazuo Ueda stated after his first bilateral meeting with Prime Minister Sanae Takaichi that the central bank remains committed to gradually adjusting the pace of monetary easing, signaling its firm intent to raise interest rates.

Kazuo Ueda told reporters after the meeting: “The mechanism where inflation and wages rise in tandem is recovering. Therefore, I explained to the Prime Minister that we are gradually adjusting the scale of monetary easing.”

This meeting comes as investors focus on Sanae Takaichi's stance on monetary policy and await details of the economic stimulus plan to be released this week. Kazuo Ueda stated, “We discussed foreign exchange issues. The central bank will closely monitor its impact on the economy while working closely with the government.” He also emphasized that the Bank of Japan will make appropriate policy decisions based on economic data.

Market Watch: Despite the Bank of Japan's recent “resolute” stance on monetary policy, the yen continues to depreciate. This trend stems from multiple structural factors, policy divergences, and market expectations.

Previously, although Japan's policy interest rates had been raised, they remained at exceptionally low levels. For instance, as of now, the Bank of Japan's benchmark interest rate stands at approximately 0.50%, while major economies like the U.S. maintain significantly higher rates. The yield on 10-year U.S. Treasury bonds has even reached around 4%.

Interest rates directly influence capital flows. When the yield on dollar-denominated assets significantly exceeds that of yen-denominated assets, investors tend to allocate funds toward dollar assets, thereby selling yen and buying dollars.

The interest rate differential between Japan and the U.S. is a key driver behind the JPYUSD's depreciation. Consequently, even though the Bank of Japan appears “resolute,” its policy remains relatively accommodative with low interest rates, making it difficult for the yen to benefit from the interest rate differential advantage.

BOJ and the Government Struggle to Stabilize the Exchange Rate Through Coordination, and the Japan-U.S. Interest Rate Differential Will Continue to Drive Market Direction_1

Technical Analysis

On Wednesday, the USDJPY rally remains intact with an upward bias for the day. A break above the 100% retracement level of 156.05, located between 146.58 and 153.26, would pave the way for testing resistance at 158.85. Currently, as long as the 153.60 support level holds, the outlook remains bullish even if a pullback occurs.

From a broader perspective, the current price action indicates that the corrective pattern originating from 161.94 (2024 high) has completed at 139.87, forming a three-wave structure. The larger uptrend dating back to 102.58 (2021 low) may be poised to resume, with potential to break above the 161.94 high.

On the downside, a break below the 149.37 support level would undermine this bullish outlook and lead to the continuation of the corrective pattern, forming a new wave of decline.

Trading Recommendations

Trading Direction: Buy

Entry Price: 155.80

Target Price: 161.06

Stop Loss: 152.50

Valid Until: December 4, 2025 23:55:00

Support: 154.78, 153.66, 152.88

Resistance: 155.89, 156.78, 158.91

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

GBP/USD drifts lower as UK inflation softens, boosting expectations for a Bank of England rate cut ahead of the Autumn Budget. U.S. labor market data and upcoming Fed commentary add potential volatility.

SELL GBPUSD

Close Time

CLOSED

1.30800

Entry Price

1.28600

1.32300

1.33246 -0.00066 -0.05%

11.4

Pips

Profit

1.28600

1.30686

Exit Price

1.30800

Entry Price

1.32300

GBP/USD modestly retreated on Wednesday, following the release of UK inflation data for October that underscored a slowdown in consumer price growth. At the time of writing, the pair was trading at 1.3120, having peaked earlier at 1.3154, as investors digested the latest economic signals that may influence the Bank of England’s (BoE) policy stance.

According to the Office for National Statistics (ONS), the UK Consumer Price Index (CPI) eased to 3.6% year-on-year in October from 3.8% in September, broadly in line with market expectations. Core CPI, which strips out volatile food and energy components, also ticked down to 3.4% from 3.5% — marking its lowest reading since March. The softening inflation data prompted a retreat in sterling, as market participants increasingly priced in a potential BoE rate cut at the central bank’s upcoming December meeting.

Money market instruments suggest an 85% probability of a 25-basis-point rate reduction, according to London Stock Exchange data. Analysts point out that the decline in CPI reflects persistent challenges in the UK economy, with consumer spending under pressure and inflationary pressures moderating. The release of Chancellor Rachel Reeves’ Autumn Budget on November 26 is expected to be a key near-term catalyst, with sterling potentially vulnerable to fiscal policy announcements that could influence market sentiment.

Meanwhile, U.S. data provided a mixed backdrop for global risk sentiment. Initial Jobless Claims for the week ending October 18 rose to 232,000, yet the market reaction was muted. Attention has shifted toward Thursday’s Nonfarm Payroll report for September, with consensus estimates suggesting an increase of 50,000 jobs, up from August’s revised 22,000. Traders are also awaiting updates on retail activity and durable goods orders, with the U.S. Census Bureau scheduled to release September data next week.

Investor focus remains sharply on the Federal Reserve as well, with anticipated commentary from Governor Stephen Miran and regional Fed Presidents John Williams and Thomas Barkin expected to provide guidance on the trajectory of U.S. monetary policy. The combination of muted U.S. labor market signals and UK inflation trends may contribute to heightened volatility in GBP/USD ahead of these events.

Technical Analysis

On the technical front, GBP/USD faced renewed selling pressure during intraday trading. The pair fell below its 50-day exponential moving average (EMA50), breaking the bullish corrective trend line that had previously supported price action. This shift has intensified negative momentum, reinforced by the return of bearish signals on the relative strength index (RSI) after clearing oversold conditions.

If the pair fails to reclaim the EMA50 zone, further downside targets appear likely. Key support levels are identified at 1.3040, 1.3000, and the major support zone at 1.2860. A sustained move below these levels could confirm a broader bearish phase, aligning with market expectations of a potential BoE easing cycle.

TRADE RECOMMENDATION

SELL GBPUSD

ENTRY PRICE: 1.3080

STOP LOSS: 1.3230

TAKE PROFIT: 1.2860

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Gold climbs to $4,113 as global risk-off sentiment strengthens, supported by safe-haven flows ahead of Nvidia earnings, FOMC minutes and the delayed NFP report. Fed uncertainty continues to limit upside momentum.

BUY XAUUSD

Close Time

CLOSED

4119.81

Entry Price

4250.00

4010.00

4207.44 +9.53 +0.23%

107.9

Pips

Profit

4010.00

4130.60

Exit Price

4119.81

Entry Price

4250.00

Gold extended its recovery on Wednesday, rising toward the $4,113 level as a renewed wave of risk aversion rippled through global markets, prompting investors to rotate back into defensive assets. The metal gained nearly 1% intraday after holding firm above $4,000—a crucial psychological zone that once again acted as a strong support during Tuesday’s dip. The rebound highlights the market’s persistent inclination to treat gold as a volatility shield whenever sentiment begins to fracture.

The broader risk environment has deteriorated meaningfully this week as concerns about stretched technology valuations continue to dominate market discussions. Investors remain increasingly cautious ahead of Nvidia’s earnings, which have become a litmus test for the entire AI-driven equity narrative. With global indices under pressure and traders questioning whether the tech rally has reached an unsustainable inflection point, the appetite for safe-haven allocations has grown steadily stronger. In my view, the current pullback in equities is less a sign of panic and more an early form of risk hedging as markets brace for a potentially pivotal week in macroeconomic data.

The cautious tone has been amplified by anticipation surrounding the Federal Open Market Committee (FOMC) Meeting Minutes due later in the day. Markets are eager to gauge the internal dynamics of the September policy debate, particularly as Federal Reserve officials have recently shown signs of diverging views regarding the need for further rate cuts. At the same time, traders are preparing for the delayed September Nonfarm Payrolls report scheduled for Thursday. The unusual delay has only intensified the market’s sensitivity to the release, with both bulls and bears unwilling to take aggressive positions ahead of the print. The labour market’s trajectory remains one of the most important missing pieces in the Federal Reserve’s evolving narrative, and gold is reacting accordingly as uncertainty builds.

Despite the uptick in safe-haven flows, gold’s upside potential remains naturally constrained by shifting interest-rate expectations. Several Fed policymakers have pushed back against the prospect of a December rate cut, arguing that inflation progress remains incomplete, even as cracks appear in pockets of the labour market. This mixture of lingering price pressures and mild employment softening has produced an environment in which policymakers appear more divided than they have been in months. As a result, traders have scaled back expectations for imminent rate cuts, reinforcing a “higher for longer” backdrop that tends to place a ceiling on gold’s near-term rallies. In my assessment, the metal is now entering a phase where sentiment-driven volatility may overshadow fundamental conviction, making gold’s path forward less linear and more reactive to incremental data surprises.

Technical Analysis

On the technical front, gold’s upward push has been reinforced by a firm break above the $4,100 level, with price action now comfortably trading above the 50-day exponential moving average. This move has aligned price with a minor short-term bullish trend, suggesting that momentum remains favourable for the bulls. Momentum indicators have shown the emergence of positive signals as well, although they have already reached overbought territory. This raises the possibility that upside progression may slow or temporarily pause before the next leg higher. However, in strong trending markets, overbought conditions are not always a precursor to a pullback; rather, they can signal underlying strength among buyers who remain willing to step in on modest dips.

The immediate technical landscape points toward potential extensions toward $4,160 and then $4,250 if buyers maintain control. A sustained daily close above $4,160 would strengthen the bullish case and open the door for a larger continuation phase targeting the upper ranges of the recent trend. Conversely, failure to hold above the $4,100 zone may expose gold to corrective pressures, particularly if Nvidia’s earnings surprise positively and help restore appetite for high-growth equities. Such a shift could briefly weaken the safe-haven narrative and trigger profit-taking among short-term traders.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 4120

STOP LOSS: 4010

TAKE PROFIT: 4250

Risk Warnings and Disclaimers

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Warren Takunda

Technical Analysis

Summary:

EUR/JPY surged to fresh multi-year highs near 181.00 as the yen weakened sharply on soaring Japanese government bond yields and rising geopolitical tensions with China, while steady Eurozone inflation data kept the euro supported.

BUY EURJPY

Close Time

CLOSED

180.800

Entry Price

186.000

178.000

181.078 +0.205 +0.11%

52.1

Pips

Profit

178.000

181.321

Exit Price

180.800

Entry Price

186.000

EUR/JPY extended its powerful upswing on Wednesday, climbing around 0.45% to trade near 180.90 and marking a fresh multi-year high as the Japanese yen continued to face broad-based selling pressure. The move reflects a deepening divergence between the Eurozone’s steady macro backdrop and Japan’s increasingly fraught fiscal and geopolitical environment, which has fuelled a sharp selloff in Japanese government bonds (JGBs) and pushed long-term yields to their highest levels in more than 17 years.

Benchmark 10-year JGB yields surged to 1.77%—a level not seen since before the global financial crisis—after renewed expectations of a more aggressive fiscal stimulus package in Tokyo. Japan’s new Finance Minister, Satsuki Katayama, reiterated on Tuesday that the government remains committed to reviving domestic growth but stopped short of detailing the scale and timing of the package. Markets interpreted her comments as a strong indication that further debt issuance is likely, adding fresh pressure to an already fragile bond market.

Analysts at Brown Brothers Harriman noted that rising Japanese yields are not merely the result of shifting rate expectations, but also a reflection of growing fiscal concerns and the deterioration of Tokyo’s diplomatic relationship with Beijing. Japan-China tensions escalated further after Chinese Foreign Ministry spokeswoman Mao Ning warned of “serious countermeasures” should Tokyo fail to retract Prime Minister Sanae Takaichi’s recent remarks on Taiwan. The threat of retaliation injected additional volatility into Japan’s financial markets, amplifying the selloff in JGBs and deepening the downward spiral in the yen.

The geopolitical backdrop reinforces a story that traders have become increasingly familiar with in recent months: Japan’s policy mix is pulling the yen in a sharply divergent direction from other major currencies. While other central banks move closer to stabilizing or even easing policy, Japan’s fiscal trajectory and political frictions are driving bond yields higher in an environment where the Bank of Japan remains cautious about normalizing monetary policy. The result is a structural imbalance that keeps the yen vulnerable.

On the European side, the euro found firmer footing after the latest Eurozone inflation report underscored further progress toward the European Central Bank’s 2% target. October’s Harmonised Index of Consumer Prices (HICP) rose 0.2% month-over-month, while annual headline inflation eased to 2.1%. Core inflation—the ECB’s preferred gauge—held steady at 2.4%. The data supports the view that the ECB is likely to maintain its current policy stance for an extended period, offering a stable backdrop for the euro at a time when policy uncertainty is weighing heavily on the yen.

This widening macro divergence—geopolitical pressure and fiscal strain lifting Japanese yields, while Eurozone inflation softens—continues to underpin EUR/JPY’s upward trajectory. The pair sits comfortably near 181.00, and momentum signals show little sign of exhaustion, keeping bulls firmly in control.

Technical Analysis

Momentum indicators continue to favor the upside. The pair successfully maintained a bullish close above 179.30, a key support level that now acts as a launchpad for continued upward pressure. The stochastic oscillator had previously shown some negativity, but price action quickly invalidated downside risk by reclaiming the upper band of its recent range.

A sustained move above 180.60—an important intermediate resistance—has strengthened expectations for a continuation of the bullish structure. Based on current momentum, traders are eyeing a move toward 180.95, followed by the next major target at 185.55. With EUR/JPY trading at multi-year highs, a break above this level could open the door for an extended bullish run in Q4.

However, risk remains tilted toward downside correction if the pair slips back below 178.60. A break of this level would likely activate a bearish corrective phase, exposing 177.65 and 177.05 as near-term support zones. Such a scenario would require renewed yen strength—unlikely unless geopolitical tensions ease or JGB yields stabilize.

For now, the expected trading range for the day sits between 179.30 and 180.60, though any fresh escalation in Japan-China tensions or further rise in JGB yields could easily extend the upper bound.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 180.80

STOP LOSS: 178.00

TAKE PROFIT: 186.00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Summary:

The Canadian dollar strengthened in the short term as domestic political tensions eased. However, the Bank of Canada's decision to pause interest rate cuts in the near term did not significantly bolster the currency's fundamentals, leaving its medium-term outlook vulnerable.

BUY USDCAD

Close Time

CLOSED

1.40091

Entry Price

1.42000

1.38900

1.38196 +0.00049 +0.04%

101.2

Pips

Profit

1.38900

1.41103

Exit Price

1.40091

Entry Price

1.42000

Fundamentals

The Canadian dollar strengthened due to multiple factors, the most significant of which was undoubtedly the easing of domestic political tensions.

On the 17th local time, the Canadian Parliament passed the first federal budget under Prime Minister Carney's administration by a vote of 170 to 168.

Canadian Prime Minister Carney unveiled his first federal budget on November 4, outlining plans to increase spending by approximately CAD 141 billion over the next five years. To offset these expenditures, the government intends to save about CAD 51 billion through spending cuts and other cost-saving measures.

New spending priorities focus on areas such as housing and healthcare. The budget plan projects that Canada's defense spending will increase to CAD 81 billion over the next five years. The document forecasts a fiscal deficit of approximately CAD 78 billion for the 2025-2026 fiscal year.

With the risk of political turmoil receding, the Canadian dollar has effectively “breathed a sigh of relief,” appreciating against other currencies. However, despite the Bank of Canada not cutting rates further in the near term, the currency's trajectory remains fragile.

Fiscal Expansion Alongside Central Bank Inaction May Fail to Reverse the Canadian Dollar's Vulnerability_1

Technical Analysis

The USDCAD re-entered an upward channel as it retraced to near the 50-day exponential moving average at 1.3968. Currently, as the asset trades within the ascending channel pattern, its overall trend remains bullish.

In terms of momentum, the Relative Strength Index (RSI) remains slightly below 50.00, indicating that the market continues to undergo adjustment.

Given that the USDCAD is approaching the lower boundary of its ascending channel pattern, the likelihood of a rebound is high. Should the USDCAD break above the November 7 high of 1.4144, it could extend its test of the April 8 high at 1.4297 and ultimately target the April decline's starting point at 1.4419.

On the other hand, should the asset break below the October 30 low of 1.3888, it could slide toward the 1.3760 range.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.3985

Target Price: 1.4200

Stop Loss: 1.3890

Valid Until: December 4, 2025 23:55:00

Support: 1.3970, 1.3954, 1.3897

Resistance: 1.4017, 1.4062, 1.4080

Risk Warnings and Disclaimers

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Alan

Forex

Summary:

The UK's October Consumer Price Index (CPI) data released today indicates a decline, significantly boosting market expectations for potential monetary easing by the Bank of England, which may exert downward pressure on the British pound.

SELL GBPUSD

Close Time

CLOSED

1.31266

Entry Price

1.27500

1.32300

1.33246 -0.00066 -0.05%

63.8

Pips

Profit

1.27500

1.30628

Exit Price

1.31266

Entry Price

1.32300

Fundamentals

Today, the UK's October Consumer Price Index (CPI) declined to 3.6%, marking the first decrease since March of this year. Detailed figures indicate a modest easing in core inflation (excluding energy and food), along with a softening in services sector inflation—these developments have prompted market participants to reassess whether the Bank of England should maintain its previously hawkish monetary stance.

Official statistics and market analysis indicate that the decline in prices for sub-sectors such as energy, accommodation, and hospitality significantly contribute to the overall CPI reduction. However, food prices remain relatively high, and wage growth continues to be a sticky factor driving inflation. Consequently, although headline inflation is gradually cooling, persistent structural resistance suggests limited scope for radical shifts in monetary policy. In the short term, weaker-than-expected data compared to previous figures already prompt the markets to revise down expectations of imminent or near-term interest rate cuts, leading to a brief downturn in the pound.

Meanwhile, recent surveys show that inflation expectations among the public and businesses have edged higher (although not fully receding), which continues to serve as a domestic counterbalance within the Bank of England. This outlook encourages policymakers to adopt a cautious tone when signaling any policy shifts.

Technical Analysis

Inflation Declines, Fueling Expectations of a Bank of England Rate Cut_1

In the 1D timeframe, the GBPUSD has recently oscillated around the 1.3180 level, failing to establish a decisive breakout above this resistance zone. Short-term bearish momentum is gradually intensifying. Concurrently, the SMA system exhibits a bearish alignment, indicating that the overall trend for the GBPUSD leans towards depreciation, with a strong likelihood of continued downside momentum.

It is recommended to go short at the highs.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3130

Target Price: 1.2750

Stop Loss: 1.3230

Valid Until: December 3, 2025 23:00:00

Support: 1.3000, 1.2700

Resistance: 1.3215, 1.3248

Risk Warnings and Disclaimers

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Tank

Forex

Technical Analysis

Summary:

Due to cautious market sentiment regarding the European Central Bank's (ECB) near-term monetary policy outlook, the euro attempted to hold steady against the U.S. dollar. Markets generally expect the ECB to maintain interest rates unchanged, supported by stable economic performance and inflation nearing target levels.

SELL EURUSD

Close Time

CLOSED

1.15753

Entry Price

1.12000

1.17500

1.16506 +0.00080 +0.07%

42.6

Pips

Profit

1.12000

1.15327

Exit Price

1.15753

Entry Price

1.17500

Fundamentals

European Central Bank: Warns of "Unprecedented Shocks" strengthen banking supervision. On the same day, the ECB issued its regulatory priorities for the next three years, sounding the alarm for the eurozone banking sector. The central bank pointed out that due to factors such as geopolitical tensions, climate crises, and technological changes, all of these forces are now piling up at the same time, pushing the likelihood of extreme events "to levels without precedent". This could have profound implications for the financial system. To this end, the ECB is requiring banks to prepare for various unpredictable shocks through core measures, including: Maintaining Adequate Capital Buffers: Ensuring banks hold sufficient capital to absorb potential losses. New supervision tool: The implementation of "reverse stress test," Supervisors will:

Set a capital exhaustion point, the moment a bank would run out of core equity.2. Ask the bank to design the scenario that could realistically push it there. Monitoring Geopolitical Risks:Banks must closely watch their overseas exposures, including international operations, export credits, and foreign exchange activities. The ECB acknowledged that the banking sector currently enjoys strong profitability, stable asset quality, and that overall capital requirements will remain steady. However, it also warned that this "benign environment" is unlikely to last, with significant downside risks. Financial markets may be experiencing overvaluation, making them prone to sudden corrections.

With diminished expectations for a Fed rate cut in December, the U.S. dollar has strengthened, and the EUR/USD pair may continue to decline. The highly anticipated September non-farm payrolls data will be released on Thursday. According to the CME FedWatch Tool, financial markets now see a 49% probability that the Federal Reserve will lower the benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting — down from 67% a week ago. In the U.S., initial jobless claims for the week ending October 18 came in at 232,000, as reported on Tuesday. Continuing claims rose slightly to 1.957 million from 1.926 million the previous week. Meanwhile, ADP reported that employers cut an average of 2,500 jobs per week over the four weeks ending November 1st. Richmond Fed President Thomas Barkin commented on the economic outlook on Tuesday, noting that the labor market appears more balanced, with businesses reporting improved labor supply. However, recent layoffs suggest caution is still warranted. Barkin stated that inflation does not appear to be rising, but it remains unclear whether it will return to the Fed's 2% target. He emphasized that reaching a broad policy consensus remains difficult without clearer data.

Technical Analysis

In the daily chart, after forming a golden cross signal, the MACD lines on the EUR/USD daily chart pull back near the zero axis, signaling that a potential trend reversal could occur at any time. The Bollinger Bands are opening downward, with moving averages diverging to the downside. The price is oscillating downward along the EMA12. The RSI stands at 47, indicating a shift toward bearish sentiment. Although the market has seen some rebounds, it remains within a downtrend channel. Unless the upper boundary of the channel is breached, the price is likely to test the Bollinger Lower Band around 1.148. Based on the weekly chart, the Bollinger Bands are narrowing, and the EMA12 is turning downward. After a death cross, the MACD lines are moving back toward the zero axis — though they still have some distance to cover, suggesting the downtrend is not yet complete. The RSI is at 53, with its highs gradually declining, reflecting strong market hesitation. Short-term support can be found near the Bollinger middle and lower Bands and the EMA50. In the near term, it is recommended to sell at highs.