BoJ Rate Hike Triggers Yen Slump, USD/JPY Eyes Resistance
The Japanese Yen has been underperforming significantly against the US Dollar, with USD/JPY reaching near 158.00 after the Bank of Japan's (BoJ) rate hike to 1.25%. The BoJ signaled cautious tightening by expecting only moderate growth and delayed achievement of 2% inflation.
Elias Haddad from Brown Brothers Harriman (BBH) notes that the bearish USD/JPY view is wrong, with key resistance levels at 158.42 and 160.00 where FX intervention risks rise. The BoJ delivered on expectations by raising the policy rate 25bps to 1.25% and reiterated its commitment to further rate hikes.
The signals were cautious, as indicated by a 7-2 vote in favor of a hike, with two dissents from Asada Toichiro and Sato Ayano in favor of holding rates steady. The BoJ also expects growth to moderate and underlying inflation to reach 2% only between the second half of fiscal 2026 and fiscal 2027.