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USD/JPY – Yen goes on a tear after BoJ rate hike

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The Japanese yen continues to sparkle. USD/JPY is trading at 150.27 in the European session, down 1.62% on the day at the time of writing. Earlier, the yen strengthened to 150.04, its highest level against the dollar since March 19.

BoJ hikes rates, announces taper of bond purchases

The Bank of Japan showed an aggressive side rarely seen at today’s meeting. The BoJ raised the benchmark rate to around 0.25%, up from the previous range of between 0% and 0.25%, its highest level since 2008. The move was considered aggressive, as the markets were uncertain whether the central bank would raise rates or continue to hold.

The BoJ tempered the hike by noting in the rate statement that it expects real interest rates to remain “significantly negative” and that it will continue an accommodative policy to boost the economy. Still, this marks the second rate hike since March and demonstrates that the BoJ is serious about tightening policy and keeping inflation in check.

Overshadowed by the dramatic rate hike, the BoJ announced it will taper its Japanese government bond purchases in half by the first quarter of 2026. The move will barely make a dent in the Bank’s bond holdings, but nonetheless indicates a shift in policy and the intent to unwind its massive monetary stimulus.

Federal Reserve up next

The Federal Reserve will hold its policy meeting later today. It’s virtually certain that the Fed will maintain rates for a seventh straight time but that doesn’t mean today’s meeting will be a sleeper. Investors will be carefully following the rate statement and Jerome Powell’s follow-up press conference. Today’s meeting is a good opportunity for the Fed to set up a September rate cut, which the markets have fully priced in.
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USD/JPY Technical

USD/JPY has pushed below support at 152.70 and 151.38. Below, there is support at 149.59
154.49 and 1.5581 are the next resistance lines

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
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