The Japanese Yen Weakened Against the US Dollar After BoJ Announcement
In a surprising move, the Bank of Japan recently announced a rate hike for the first time since 2007 and also scrapped its Yield Curve Control policy. This decision led to a weakening of the Japanese Yen across the board, particularly against the US Dollar.
The USD climbed to a two-week high, supported by expectations of a more hawkish stance from the Federal Reserve. BoJ Governor Kazuo Ueda’s remarks further fueled the selling bias towards the JPY, as did the broad-based strength of the US Dollar.
Japan’s Finance Minister, Shunichi Suzuki, highlighted the positive impact of this year’s wage negotiations, noting record-high wage growth and positive momentum in wages. This news added to the bearish sentiment surrounding the JPY.
Market analysts are now pricing in less than three 25 basis points rate cuts in 2024, leading to a shift in expectations for the Fed to potentially start a rate-cutting cycle at their June policy meeting.
Technical analysis suggests that the USD/JPY pair may soon challenge the year-to-date high and could potentially surpass the 151.00 mark in the near future. This news has raised speculation among traders and investors about the potential further weakening of the Japanese Yen against the US Dollar.
Overall, the recent developments surrounding the BoJ announcement and the hawkish Fed expectations have significantly impacted the currency markets, particularly the USD/JPY pair. Investors will be closely monitoring these events and their implications moving forward.
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