The yen strengthened on Friday after the Bank of Japan (BOJ) raised interest rates by 25 basis points, pushing USDJPY down to 155.21, marking a 0.51% decline for the day. The currency pair fluctuated sharply post-announcement, with an intraday high of 156.40, before dropping to a session low of 154.99 as traders responded to the central bank’s decision and inflation outlook.
Yen gains, bond yields rise after BOJ hikes rates https://t.co/GqDVq2AQt3 pic.twitter.com/o79z933I88
— Reuters (@Reuters) January 24, 2025
The BOJ’s rate hike, which had been widely anticipated, was accompanied by an upward revision in inflation forecasts. Despite the policy decision being non-unanimous, the BOJ’s confidence in achieving its inflation target provided support for the yen, driving it higher.
Market participants are now focusing on comments from BOJ Governor Kazuo Ueda, as he provides insights into the central bank’s future monetary policy direction.
Picture: USDJPY drops 0.51%, testing support at 154.995 as bearish momentum strengthens with technical indicators confirming downward pressure. Learn more on the VT Markets app.
USDJPY is currently facing downside pressure after breaking below the 155.50 level, with support seen at 154.99, the session’s low. The MACD (12,26,9) supports the bearish outlook, with the MACD line below the signal line and a negative histogram indicating growing downward momentum. A further decline in momentum could lead to additional downside movement.
Resistance is currently seen at 156.745, aligning with recent highs, while support is found near 154.995, the day’s low. A break below this support could open the door for further declines, whereas a reversal could target the resistance level.
Market participants will closely monitor upcoming statements from the BOJ and any potential shifts in US monetary policy, which could impact the yen’s strength. The US dollar is also under pressure amid speculation of potential Fed rate cuts, adding further volatility to USDJPY movements.
With market sentiment favouring the yen after the BOJ’s policy shift, traders should watch for key levels and prepare for further volatility in the sessions ahead.
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