USD/JPY Closes in on Multi-Decade Highs after the BoJ & Fed Decisions
USD/JPY Analysis
The pair made a strong start to the year due to the continuation of the favorable monetary policy differential. The bank of Japan procrastinated on normalizing its extraordinarily accommodative stance and the Fed adopted a more conservative stance around cutting rates.
The Bank of Japan did pivot on Tuesday though, ending years of ultra-loose setting. It lifted rates out of negative territory and abandoned the yield curve control, but this was far from a hawkish shift. Officials said they will continue with bond purchases and pledged to maintain accommodative conditions.
Furthermore, markets had come to expect the change and USD/JPY strengthened after the decision, whereas the Fed has no compelling reason yet to start removing monetary restraint. Bulls are in firing distance of the July 1990 highs (152.20), but further gains towards 155.78 may prove elusive.
The Fed appeared dovish on Wednesday however, as it kept guidance for three cuts this year, in an outcome that harmed the greenback and boosted Wall Street. This shift in the monetary policy dynamics could eventually lead to a significant repricing of the pair. Moreover, the Yen weakness in spite of the BoJ's pivot, raises the risk of an FX intervention by Japanese authorities. They had last stepped in in October 2022 at similar price levels and Finance minister Suzuki said today that the government is watching currency moves with a high sense of urgency, according to Reuters. [1]
These factors can cap the upside and drive a pullback below the EMA200 (at around 149.00), but the downside contains multiple roadblocks and sustained weakness below 145.88 does not easy at this stage.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 17 Apr 2026 https://www.reuters.com/markets/asia/boj-chief-vows-support-economy-with-monetary-stimulus-2024-03-21/ |
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