USD/JPY Struggles Ahead of BoJ Rate Decision Amid Escalating Geopolitical Tensions
The USD/JPY pair is struggling to maintain its upward momentum as traders await the highly anticipated Bank of Japan (BoJ) rate decision on Friday. The Japanese central bank is expected to raise its benchmark interest rate by 25 basis points (bps) to a 31-year high of 1.25%, which would offer support to the Japanese Yen and weigh on the USD/JPY pair.
Despite the US Federal Reserve's hawkish rate hike on Wednesday, the USD/JPY has been unable to capitalize on its weekly gains from the past three days. The pair is currently trading around 156.00, with the focus shifting to the BoJ's decision and its implications for the currency market.
Escalating Middle East tensions are also contributing to the safe-haven demand for the US Dollar, which remains a major factor in the USD/JPY dynamics. The geopolitical risks premium is favoring USD bulls, limiting the downside for the pair.