JPY Trades in Narrow Range as Volatility Falls

The Japanese Yen (JPY) continues to trade within a tight range, extending the consolidation seen over the past few weeks. According to Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret, market activity remains muted as traders await fresh economic signals.

Volatility Slips to Multi-Year Lows

JPY volatility has softened across multiple time horizons, with the one-month measure approaching its December low of 7.44%, levels last observed in March 2024. Weak domestic data, particularly in November’s labor cash earnings, have contributed to reduced market momentum.

Japanese Government Bond (JGB) yields have responded, falling 4–6 basis points across the curve. Analysts note that the JPY could face short-term weakness if the Bank of Japan (BoJ) interprets the soft economic data as a reason to delay or slow further monetary tightening.

USD/JPY Neutral Ahead of Range Break

Technically, the USD/JPY pair remains neutral, with the current trading range roughly between 154.50 and 158, levels first established in mid-November. Traders are watching for a decisive breakout above or below this range, which could set the tone for near-term Yen movements.

Until fresh economic indicators or BoJ policy signals emerge, the JPY is expected to remain subdued, maintaining its tight consolidation with low volatility.

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