USD/JPY plunges to near 151.50 as US Dollar corrects further

• USD/JPY dives to near 151.50 as the US Dollar’s correction extends further.
• The US Dollar refreshes weekly low ahead of the US PCE inflation data for October.
• The BofA sees the pair heading into a longer-term bearish trajectory.

The USD/JPY pair is down around 1%, plummets to near 151.50 in European trading hours on Wednesday. The asset plunges as the US Dollar (USD) extends its correction triggered as market participants anticipated Scott Bessent, United States (US) President-elect Donald Trump’s nomination for Treasury Secretary, will maintain fiscal discipline and political steadiness despite focusing on fulfilling Trump’s economic agenda.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh weekly low near 106.30. Scott Bessent said that he would focus on lowering the budget deficit through spending cuts and enacting tariffs with a “layered in gradually” approach. A move that won’t result in a significant increase in inflation than feared.

Meanwhile, the Bank of America (BofA) advises caution against picking short-term Japanese Yen (JPY) strength as it sees the currency drifting into a longer-term bearish trajectory. The BofA said that policies such as increased tariffs and tighter immigration controls from the incoming US administration could trigger a risk-off environment, initially supporting the yen. However, it anticipates a correction in early 2025 and projects the USD/JPY pair to rise to 160.00 by the end of 2025 on expectations that long-term capital flows from Japan to the US will accelerate in the second half of 2025 due to their deregulatory measures.

Going forward, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October, which will be published at 15:00 GMT. The PCE report is expected to show that headline and core price pressures accelerated on year, while monthly figures grew steadily.