USD/JPY slides below 155 amid strong JGB demand – BBH

FXStreetDec 4, 2025 11:04 AM

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USD/JPY dipped below 155.00 as strong demand for Japan’s 30-year government bonds pushed yields lower, highlighting investor appetite ahead of the Bank of Japan’s (BoJ) December rate decision, BBH FX analysts report.

USD/JPY might drift Toward 140 on yield spread

"USD/JPY dipped below technical support at 155.00. 30-year JGB yields dropped to 3.38% after testing a series high near 3.45% yesterday on solid buying interest from investors. The 30-year bond sale's average bid-to-cover ratio was 4.04 vs. 3.125 in November, the highest since May 2019."

"The swaps market has now virtually fully priced in a 25bps Bank of Japan rate hike to 0.75% on December 19. Tighter monetary policy paired with Japan’s government latest fiscal stimulus package is JPY positive. Bottom line: we see room for USD/JPY to adjust lower towards the level implied by US-Japan two-year bond yield spreads around 140.00."

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