USD/JPY declines to near 157.00 as Japan warns against sharp currency moves

• USD/JPY weakens to near 157.00 in Monday’s early Asian session.
• A Japanese official warned of deep concern over the Japanese Yen’s weakness. 
• Economists expect US Q3 GDP growth to moderate to around 3.2%. 

The USD/JPY pair attracts some sellers to around 157.00 during the early Asian session on Tuesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) after Japanese officials warned against "one-sided and sharp" currency moves, raising fears of intervention. 

Japan’s top foreign exchange official, Atsushi Mimura, said on Monday that recent foreign exchange moves were one-sided and sharp. Mimura added that he is concerned about the foreign exchange move and that the government will take appropriate action against excessive actions. Some verbal intervention from Japanese authorities could provide some support to the JPY and act as a headwind for the pair. 

Markets expect the US Federal Reserve (Fed) to continue cutting interest rates in 2026 due to softer-than-expected US inflation and a slight rise in the Unemployment Rate. Financial markets are pricing in nearly a 21.0% odds the Fed will cut interest rates at its next meeting in January, after it reduced them by a quarter-point at each of its last three meetings, according to the CME FedWatch tool.

Traders will take more cues from the preliminary reading of the US Gross Domestic Product (GDP) for the third quarter (Q3) later on Tuesday. The US economy is estimated to have grown at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2. If the GDP report shows a stronger-than-expected outcome, this could lift the Greenback against the Japanese Yen. Also, the US Durable Goods Orders, Industrial Production, and ADP employment weekly reports will be released on the same day.