Greenback is floating steadily above ¥148.20 with not much exciting stuff going on right now for the yen. But big things are coming at the end of the month.

The USDJPY pair was climbing steadily on Tuesday and remained near a two-month high Wednesday with forex traders finding new reasons to hold the US dollar and dump the Japanese yen. The dollar-yen pair shot up above ¥148.20 this morning, up from a Tuesday low of ¥147.45. Over a longer time frame, the dollar has regained more than 6% of its valuation since the 2024 bottom of ¥139.60 hit on September 16.

Among the fresh incentives for the bulls to pile their bets is the diminished prospects of another jumbo-sized cut to interest rates in the US. Lower rates are generally bad for the greenback because they strip away its ability to yield handsome returns on deposits and dollar-tied assets, such as bonds. Now markets expect the Federal Reserve to cut rates by a more modest clip of 25 basis points in November, down from the 50-basis-point cut in September.

In Japan, the new Prime Minister Shigeru Ishiba made an about face last week when he changed his stance on interest rates, saying the Bank of Japan shouldn't rush to hike interest rates. During the election, however, markets lifted the yen’s valuation on expectations that Ishiba will support the case for more hikes. Volatility might be expected at the end of this month as Japan is headed into a general election on October 27. Later, on October 31, the Bank of Japan will set the new interest rate.