Intervention risk remain but NFP may cause volatilityUSD/JPYOANDA:USDJPYWiseLeoTradingThe yen’s rally has been driven by increasingly aggressive BoJ tightening expectations. Bloomberg-based market pricing has moved above 100% for the expected rate increase, meaning a standard 25 bp September hike is already more than fully discounted in OIS markets. This pricing suggests investors are assigning some probability to either a larger-than-25 bp move, a follow-up hike at a subsequent meeting, or a more hawkish policy path than currently assumed. Bloomberg also reported that the BoJ is leaning toward lifting its policy rate from 1.00% to 1.25% at its September 17–18 meeting, while remaining flexible regarding the speed of further hikes. This creates an important distinction for USDJPY: the September hike itself may have limited additional yen-positive impact because it is already priced. The larger market driver will be whether the BoJ signals another hike in October or December, acknowledges room for a faster pace of normalisation, or delivers a larger-than-expected move. Conversely, a cautious statement focused on weak consumption, downside growth risks, or a gradual approach could trigger yen profit-taking even if the BoJ raises rates as expected. Japan’s July household-spending report remains the principal domestic counterargument to an increasingly hawkish BoJ outlook. Real household expenditure fell 3.6% YoY, substantially worse than the 1.6% decline expected, extending the run of annual declines to eight months. The data show that private consumption remains fragile, which may restrain the BoJ from committing to an aggressive consecutive-hike cycle despite inflation, currency weakness, and market pressure for further normalisation.rmb.reuters+1 The US August nonfarm-payrolls report is therefore likely to determine the near-term USDJPY reaction. A weaker labour-market print, softer wage growth, or negative revisions would add to expectations for Fed easing and reinforce the narrowing US-Japan policy and yield differential, supporting a break below 155.20. In contrast, a stronger payrolls and wage outcome could lift US yields and prompt a corrective rebound, but the upside may remain limited because BoJ tightening is already fully priced and attention has shifted toward the possibility of further hikes beyond September. Consensus expected roughly 53k additional payrolls following July’s 23k decline USDJPY extended its decline after failing to recover toward the EMA resistance zone, with price sliding toward 155.20 before stabilising modestly above the level. The pair remains below the downward-sloping short- and medium-term EMAs, while the broader sequence of lower highs and lower lows maintains a bearish technical structure. A sustained break below 155.20–155.34 could open the way toward 154.80, with 154.00–154.07 serving as the next major downside support area. Alternatively, if the pair defends 155.20, it may enter a volatile consolidation between 155.20 and 156.20; however, rebounds are likely to remain capped while price stays beneath the EMA cluster. By Van Ha Trinh - Financial Market Strategist at Exness