Comments from key Fed officials contributed to this shift. New York Fed President John Williams said policymakers could still adjust rates in the “near term,” while Fed Governor Stephen Miran noted recent payroll data supports December easing, adding he would favor a 25-bp cut if he held a vote.

Boston Fed President Susan Collins remains undecided, maintaining some uncertainty.

Consumer Sentiment Improves Despite Inflation Concerns

The University of Michigan’s November Consumer Sentiment Index edged up to 51, above the preliminary 50.3, though below October’s 53.6 reading. Inflation expectations eased slightly: the one-year outlook dipped to 4.5% from 4.7%, and the five-year measure declined to 3.4% from 3.6%.

The data suggests households are marginally more confident, though still cautious about inflation.

Market Outlook: Dollar Faces Near-Term Pressure

Despite last week’s rally, the dollar faces headwinds as traders weigh rising rate-cut expectations against mixed Fed commentary. With PPI data and additional Fed remarks ahead, investors are adopting a more cautious stance.

Near-term performance will likely hinge on incoming inflation and labor data, alongside clearer signals from policymakers. A confirmed shift toward easing would keep the dollar under pressure into year-end.

Created on November 24, 2025

• The US dollar slid quickly against the Japanese yen on Friday before stabilizing, with buyers expected to appear on further dips.
• Wide interest rate differentials and limited BoJ tightening prospects continue to underpin longer-term bullish pressure.

The US dollar dropped against the Japanese yen rather quickly during the trading session on Friday, as we are testing the 156.50 yen level. That being said, we are seeing a little bit of a bounce at this point at the end of the session, and it suggests that we continue to see a little bit of hesitation on the downside. Even if we do fall from here, we will likely continue to see plenty of buyers near the 155 yen level, followed by the 154 yen level, and then ultimately the 153 yen level, where the 50-day EMA is racing toward it.

Underlying Rate-Differential Support

The 158 yen level has been a bit of a barrier, and that’s not a huge surprise considering that it’s been important in the past. But I look at this through the prism of a market that has a major interest rate differential, and therefore, you have to keep in mind that a lot of professional traders are collecting swap at the end of the session.

Ultimately, it’s not until we are looking at this as a market that cannot be shorted anytime soon, and really, it’s not until we break down below the 150 yen level. All things being equal, this is a very volatile market, but with the Bank of Japan in a situation where they may not be able to tighten monetary policy anytime soon, and after the most recent election, it certainly looks like there won’t be the political will. I do think it’s probably only a matter of time before we go higher, but this pullback makes sense as people may have been taking profit heading into the weekend.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

• EUR/USD forecast remains tilted to the upside amid narrowing rate differentials.
• The short-term view remains consolidating, with focus on German IFO data.
• Technical forecast is mildly bearish within the current consolidation, supported by 1.1470, with eyes on 1.1590.

The EUR/USD forecast remains slightly up on Monday, as renewed odds of a December Fed rate cut have pressured the US dollar. The pair stays steady above the 1.1500 level as the Dollar Index pulls back while the ECB’s interest rate outlook remains stable.

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The New York Fed President William’s comments suggested that labor market risks outweigh concerns about inflation. This pushes rate cut expectations, with markets reacting swiftly. The CME FedWatch tool now shows a 70% probability of a rate cut, up from 30% last week.

Still, the Fed’s outlook remains mixed, with other officials, such as Lorie Logan and Susan Collins, cautioning against premature easing. These comments have limited dollar selling, but the broader narrative tilts toward policy loosening.

On the European side, the ECB is widely expected to keep interest rates unchanged in December, supported by stable inflation at around 2% and resilient labor markets. This has kept the EUR/USD safe from downside shocks.

Markets now focus on Germany’s IFO Business Climate Survey, projected to tick up to 88.5. Before the data release, the pair appears to be supported by a firm ECB, reigniting speculation about Fed rate cuts.

Strategists maintain a positive medium-term outlook for the euro, as Danske Bank expects the pair to move to 1.2200 over the next 12 months, as rate differentials narrow. Meanwhile, Morgan Stanley forecasts 1.23 by mid-2026 but anticipates a subsequent pullback.

Key Events Ahead

• Germany IFO Business Climate – Monday
• US September PPI – Tuesday
• US Retail Sales – Tuesday
• FOMC Speakers – Throughout the Week
• Eurozone confidence and sentiment surveys – Later in the week

EUR/USD Technical Forecast: Range-bound Above 1.1500

The EUR/USD 4-hour chart shows a mild bearish tilt as the price remains below the 20-period MA but is supported by the 1.1500 level ahead of swing low support near 1.1470. The RSI staying below the 50.0 mark, pointing south, suggests more weakness.

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However, the overall trend remains one of consolidation, looking for a catalyst to trigger a breakout. If a bullish surprise occurs, the price could test the ultimate resistance near the 200-period MA at 1.1590.

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The GBPJPY pair ended its last bullish rally by recording the target at 206.90, facing strong barriers to push it to activate the attempts of gathering the gains by reaching 204.30, to provide some sideways trading by its fluctuation near %2.00 Fibonacci extension level at 205.20.

Note that stochastic exit from the overbought level might force the price to resume the bearish corrective attempts, to renew the pressure on 204.20 level, then wait for testing extra support at 203.75. 

The expected trading range for today is between 204.30 and 205.70

Trend forecast: Bearish

The EURJPY pair confirmed its surrender to the bearish corrective bias dominance by providing several negative closes below 181.75 barrier, forming some corrective trading by targeting 179.75 level.

Despite the main stability within the bullish channel’s levels, the stability below the previously mentioned barrier and stochastic attempt to provide negative momentum support the dominance of the corrective bias, to target the initial support at 179.30 and breaking it might extend the trading towards 178.60, forming the main target of the current trading.

The expected trading range for today is between 179.30 and 181.10

Trend forecast: Bearish

“Japan’s Yen in real effective terms is almost as weak as Turkish Lira, which is the world’s weakest currency after Erdogan eviscerated his central bank. Japan is in denial on debt. Sanae Takaichi’s fiscal stimulus makes this worse…”

James E. Thorne, Chief Market Strategist at Wellington Altus, previously commented:

“Sanae Takaichi, the “Iron Lady of Japan,” has revived Abenomics-style stimulus that will expand global liquidity through fiscal easing and ultra-loose credit. Her policies strengthen the yen carry trade and the U.S. dollar, gold’s pullback should not be a surprise. Contrary to popular belief, the “death of the dollar” is greatly exaggerated. King Dollar is alive and well.”

On Monday, November 24, debates over the fiscal stimulus package and BoJ commentary will influence USD/JPY trends. Traders should also monitor yen intervention warnings from the Japanese government if USD/JPY climbs toward 160.

Meanwhile, US economic data will also play a crucial role in driving USD/JPY trends through its impact on Fed rate expectations.

US Economy and Fed Speakers in Focus

Economists forecast the Chicago Fed National Activity Index (CFNAI) to drop from -0.12 in August to -0.2 in October. Furthermore, economists expect the Dallas Fed Manufacturing Index to rise from -5.0 in October to -1.0 in November.

CFNAI will likely face greater scrutiny given that the index captures the entire US economy, including manufacturing and services. Economists view the CFNAI as a broader economic barometer since it considers production, employment, personal income, and sales. By contrast, the manufacturing sector contributes around 10% to the US GDP.

A sharper-than-expected fall in the CFNAI could signal a loss of economic momentum midway through Q4, supporting a more dovish Fed policy stance. USD/JPY may drop toward 155 on a lower CFNAI reading.

Beyond the data, traders should closely monitor FOMC members’ speeches after last week’s shift in sentiment toward Fed rate cuts. According to the CME FedWatch Tool, the chances of a December Fed rate cut jumped from 44.4% on November 14 to 71.0% on November 21.

Growing support for a December cut could weaken demand for the US dollar and push USD/JPY toward 150.

USD/JPY Scenarios: Diverging Monetary Policies

• Bearish USD/JPY Scenario: Hawkish BoJ chatter, intervention threats, softer US data, and dovish Fed comments could drag USD/JPY toward 150.
• Bullish USD/JPY Scenario: Dovish BoJ rhetoric, stronger US data, and hawkish Fed comments could send USD/JPY toward 160.