Traders betting against the Japanese yen are showing little sign of retreat, even after Bank of Japan (BOJ) Governor Kazuo Ueda indicated that an interest-rate increase is likely at this month’s policy meeting. Despite the heightened expectation of a December rate hike, the currency has struggled to gain meaningful traction.
Market pricing now suggests a strong chance the BOJ will lift its policy rate from 0.50% to 0.75% at the December 18–19 meeting following Ueda’s recent remarks. The shift has pushed Japanese government bond yields sharply higher, with the 10-year yield reaching its highest level in nearly twenty years.
Yet the yen remains under pressure. After a brief rise on Ueda’s comments, the currency quickly gave back gains, with USD/JPY drifting back toward earlier levels. Analysts say the persistence of bearish sentiment highlights how deeply traders remain positioned against the yen. Major institutions, including Bank of America, Nomura and RBC Capital Markets, continue to reflect a negative bias toward the currency, while indicators such as Bloomberg’s “yen pain gauge” show investor confidence still deeply underwater.
For many traders, even a BOJ rate hike may not be enough to fundamentally change the landscape. Japan’s interest rates would remain far below those in the United States, preserving the wide yield gap that drives carry-trade demand and weighs on the yen. Some investors also view any short-term yen rebound as a chance to rebuild bearish positions rather than a sign of a lasting trend reversal.
Attention now turns to the BOJ’s December meeting, which will determine whether a rate increase marks the start of a gradual tightening cycle or simply a one-off adjustment. Traders will also watch upcoming wage and inflation data, along with developments in U.S. monetary policy, which could further influence global currency flows. Despite the BOJ’s hawkish tilt, yen bears appear confident that the forces pushing the currency lower remain firmly in place.
