USD/JPY Pair Breaks Down Below 160 Ahead of BoJ Rate Decision

The USD/JPY pair broke down below the 160 level on Wednesday as markets await the Bank of Japan's rate decision later that night. The move comes after a brief pullback in USD/JPY, which was met with support and a subsequent bounce.

The Bank of Japan's decision to keep rates unchanged is widely expected, but policymakers are trying to pre-empt any potential intervention by the Japanese government. This is because the long-term carry trade has created massive swings on either side of the equation, with the USD/JPY pair being particularly affected.

James Stanley notes that despite being just 13.6% of the DXY basket, the Japanese Yen can have a significant impact across major FX pairs. He also suggests that the Fed's decision to keep rates unchanged has created a situation where rate cuts are less likely, making it more challenging for bulls to regain momentum.