Forex News: Yen Rises Amid Rising BoJ Rate Hike Bets

Yen Rises Amid Rising BoJ Rate Hike Bets

(RTTNews) - The Japanese yen strengthened against other major currencies in the early European session on Wednesday, due to growing geopolitical tensions and hawkish Bank of Japan or BoJ interest rate hike bets.

One of the main reasons JPY's gains is the growing consensus that the Bank of Japan (BoJ) will continue on its policy normalization path, which represents a substantial divergence from dovish US Federal Reserve (Fed) forecasts.

BoJ Governor Kazuo Ueda stated on Monday that if pricing and economic trends follow expectations, the central bank will keep hiking interest rates.

Ueda continued, "The economy will achieve sustained growth if the level of monetary support is adjusted, and wages and prices are likely to rise together moderately, leaving the door open for further policy tightening."

Tensions between China and Japan escalated, and weak U.S. data spurred hopes for more rate cuts.

Federal Reserve Governor Stephen Miran has called for aggressive rate cuts exceeding 100 basis points in 2026, arguing that current tight monetary policy is dragging down the world's largest economy.

Investors looked ahead to the release of some key U.S. economic readings this week that could set the tone for the Federal Reserve's rate outlook.

In other economic news, data from Jibun Bank showed that the services sector in Japan continued to expand in December, albeit at a slower pace, with a services PMI score of 51.1. That's down from 52.0 in November.

In the early European trading today, the yen rose to a 2-day high of 211.03 against the pound, from an early low of 211.76. The yen may test resistance around the 209.00 region.

Against the euro and the Swiss franc, the yen advanced to near 3-week highs of 182.71 and 196.41 from early lows of 183.38 and 197.26, respectively. If the yen extends its uptrend, it is likely to find resistance around 180.00 against the euro and 194.00 against the franc.

The yen edged up to 156.30 against the U.S. dollar, from an early low of 156.81. On the upside, 154.00 is seen as the next resistance level for the yen.

Looking ahead, U.S. MBA mortgage approvals data, U.S. and Canada PMI reports for December, U.S. factory orders for October and U.S. EIA crude oil data are slated for release in the New York session.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2026 RTTNews.com. All Rights Reserved

Market News provided by RTTNews