Boj Policy And Inflation Target
BoJ Governor Kazuo Ueda reiterated that achieving a 2% inflation target is crucial for maintaining credibility. The Fed, on the other hand, has adjusted its growth outlook downwards due to concerns regarding the administration’s trade policies.
Geopolitical tensions in the Middle East could also bolster the safe-haven Yen, with recent military escalations between Israel and Hamas potentially contributing to market instability. While the USD looks to recover from multi-month lows, expectations for divergent BoJ and Fed policies may limit substantial gains for USD/JPY.
Technically, resistance for USD/JPY exists around 149.25-149.30, while downside protection is seen near 148.60-148.55. A break below this level could accelerate declines towards lower support levels, including the 147.30 region, which marks the lowest level since early October.
Ultra Loose Monetary Policy Shift
The BoJ’s long-standing ultra-loose monetary policy has greatly influenced Yen valuation against other currencies. However, recent decisions to adjust this monetary stance aim to combat rising inflation, driven by wages and energy prices, which have exceeded the BoJ’s intended targets.
