New York, NY (PinionNewswire) — The Japanese yen has entered a critical phase as global monetary conditions shift and Japan’s domestic policy stance evolves. According to StarShine Capital’s latest currency models, the yen remains fundamentally undervalued after years of depreciation, yet recent developments suggest the potential for short-term stabilization and selective appreciation. The USD/JPY pair, which reached multi-decade highs, is now responding more sensitively to interest-rate expectations, risk sentiment, and intervention risks.

Current Performance of the Yen

After briefly trading near ¥158 per dollar, USD/JPY has retreated into the ¥155–156 range, reflecting a slight recovery in yen demand. Market sentiment shows that investors are increasingly attentive to:

• Shifting expectations for Bank of Japan (BoJ) policy
• U.S. Federal Reserve rate-cut prospects
• Elevated volatility in global equity and bond markets
• Japan’s increased willingness to intervene verbally — and potentially physically — in FX markets

StarShine Capital views this as a transition period in which the yen may begin moving away from its extreme weakness seen earlier in the year.

Macro Drivers Behind the Yen’s Recent Behavior

1. Bank of Japan Policy Signals Becoming More Supportive for the Yen

For the first time in years, the BoJ is openly discussing additional normalization steps. Even marginal increases in overnight rates or reduced bond purchases can significantly influence currency sentiment due to Japan’s historically low-rate environment.

A market that previously assumed “eternal zero rates” is now repricing Japan’s monetary trajectory, offering structural support for the yen.

2. U.S. Federal Reserve Approaching a Rate-Cut Cycle

The USD/JPY trend is dominated by rate differentials. As the Fed signals the likelihood of further rate cuts in 2025–2026, the yield advantage of U.S. assets diminishes.
A narrowing rate spread typically results in:

• Less incentive for carry trades
• Reduced dollar strength
• Higher probability of yen appreciation

StarShine Capital models show that each 25-basis-point shift in Fed expectations materially alters short-term USD/JPY flows.

3. Risk Sentiment and Safe-Haven Flows

Despite the yen’s weakened structural position, it still functions as a global safe-haven asset during sharp risk-off events. Rising geopolitical tensions, equity market corrections, or bond market instability can trigger sudden yen demand.

Recent episodes of market volatility have already produced temporary but noticeable yen strengthening.

4. Japanese Government Intervention Risks

Tokyo has increased its readiness to intervene if the yen experiences excessive depreciation.
Verbal warnings, followed by suspected market operations in past cycles, have shown strong short-term impact.
This intervention floor adds additional upside risk for the yen.

StarShine Capital Technical Outlook on USD/JPY

Key Support Levels

• ¥154.00 – First meaningful support; break below signals momentum shift
• ¥150.00 – Critical psychological and structural level; major support zone
• ¥146.00–147.00 – Medium-term reversal area if yen strength accelerates

Key Resistance Levels

• ¥158.00 – Recent high and immediate resistance
• ¥160.00 – Strong psychological barrier; potential trigger for official intervention

StarShine Capital’s technical indicators show momentum slowing, with MACD flattening and RSI retreating from overbought conditions. These signs support a potential consolidation or downward retracement in USD/JPY.

Forward Scenarios According to StarShine Capital

Scenario 1: Gradual Yen Strengthening (Most Likely)

If U.S. rate cuts progress and the BoJ continues subtle normalization, the yen may continue to recover toward the ¥150–152 range.

Scenario 2: Range-Bound Trading

If both central banks move slowly and risk sentiment remains stable, USD/JPY may oscillate between ¥154–158, forming a consolidation zone.

Scenario 3: Yen Weakening Resumes

Should U.S. data surprise to the upside or the BoJ delay policy adjustments, the pair could retest ¥158–160.
However, at these levels, intervention risk becomes extremely high, limiting sustained upside.

StarShine Capital Conclusion

The Japanese yen is transitioning from a prolonged weakening cycle into a more balanced environment shaped by policy convergence, global risk conditions, and reduced rate differentials. StarShine Capital’s analysis suggests:

• Upward pressure on USD/JPY is losing momentum
• Structural signs favor the yen gradually stabilizing
• Intervention and policy normalization provide additional support

For traders and portfolio managers, the yen now offers both tactical opportunities and longer-term revaluation potential, particularly as global monetary policy shifts into a new phase.