BOJ Hike Sets Stage for Yen Direction: Will Hawkish Pivot Unleash Carry Trade Chaos?

The Bank of Japan's (BOJ) decision to hike interest rates by 25 basis points to 1.25% has been met with mixed expectations from markets.

Nominal wages in Japan are surging at a 32-year high, providing the BOJ with the necessary validation to justify its fastest tightening pace since 1990.

The key will be Governor Ueda's press conference, where he will outline his vision for the terminal rate and whether he links currency weakness to inflation.

A hawkish signal from Ueda could strengthen the yen and test whether the dollar's post-Fed floor holds, while a neutral outcome would likely preserve current levels and maintain front-end yield support.