USD/JPY Slips Amid BoJ Rate Hike

Fundamental Analysis

* Tightening Turn: The Japanese yen surged against the U.S. dollar after the Bank of Japan (BoJ) announced a rate hike on Friday, raising interest rates to their highest level since the 2008 global financial crisis. The BoJ increased its short-term policy rate from 0.25% to 0.5%, a level unseen in 17 years—while also revising its inflation forecasts upward, signaling confidence that rising wages will help sustain inflation around its 2% target. The decision passed with an 8-1 vote, with board member Toyoaki Nakamura dissenting. BoJ Governor Kazuo Ueda noted in a press conference that the weak yen continued to drive up import costs, while wage increases were becoming more widespread and entrenched across businesses.

Technical Analysis

*Technical Breakout: USDJPY was traded lower while currently testing the support level 155.550. MACD which illustrate bearish bias signal with the formation of death cross suggest the pair to likely extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 153.650 after it breach below the level 155.550. Conversely, a potential reversal is also to be expected and the price could head back towards 157.550.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Looking ahead, traders will focus on key U.S. data, including the Manufacturing PMI, ADP Non-Farm Employment Change, and Non-Farm Payrolls, to assess market sentiment and gain further insights into economic trends.

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Monitoring

Stay updated on US and Japan data, Trump updates, global market updates, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.