USD/JPY braces for volatility as BoJ December rate hike looms

USD/JPY is trading cautiously around 150.50 as markets position for a likely Bank of Japan rate hike in December, with uncertainty surrounding the terminal rate path adding to volatility expectations. Japanese 10-year yields have risen to 1.05%, their highest since July, reflecting growing confidence in BoJ policy normalization. The central bank's unclear communication about where rates might peak has created a two-way risk for the pair. Technical analysis shows strong support at 150.00, coinciding with the psychological level and 100-day moving average, while resistance sits at 151.50. Options data indicates elevated implied volatility for December expiries, suggesting traders expect significant moves around the BoJ meeting. A hawkish surprise could drive USD/JPY below 149.00, while disappointment might see a relief rally toward 152.00.