Japanese Yen fails to gain support after BoJ hike

• BoJ raises short-term interest rate to 1.00% from 0.75%, the highest level since 1995.
• The central bank signaled further tightening remains possible if inflation risks persist.
• BoJ’s decision to pause the bond taper from April 2027 limits Yen strength and keeps USD/JPY supported.

The USD/JPY pair rose slightly around the intervention zone of 160.40 on Tuesday, as the Japanese Yen (JPY) struggles to gain strong traction even after the Bank of Japan (BoJ) raised interest rates to their highest level in more than three decades.

The BoJ lifted its short-term policy rate to 1.00% from 0.75%, in a widely expected move as policymakers continued to focus on upside inflation risks. The decision was backed by a 7-1 vote, while Deputy Governor Shinichi Uchida signaled that the central bank remains prepared to tighten further if inflation persists.

However, the Yen failed to rally sharply as the BoJ also adopted a more cautious stance on bonds. The central bank decided to pause its bond-buying taper from April 2027 onward, while continuing to purchase roughly ¥2 trillion in Japanese government bonds per month.

This suggests that while the BoJ is moving further away from ultra-loose monetary policy, it still wants to avoid excessive volatility in the Japanese government bond market.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 160.45, maintaining a constructive bullish bias as it hovers just below nearby resistance at 160.47. The pair remains supported above both the 20-period Simple Moving Average (SMA) at 160.24 and the 100-period SMA at 159.85, suggesting the broader uptrend is still intact despite the latest consolidation. The Relative Strength Index (RSI) at 58 stays in positive territory without being overbought, hinting that buyers retain control but may need a clear break over 160.47 to trigger fresh upside momentum.

On the topside, immediate resistance is aligned at 160.47, where a sustained break would open the way for further gains in the near term. On the downside, initial support is seen at the horizontal level near 160.32, followed by the 160.24 band, where a price floor converges with the 20-period SMA, and then 160.15. Deeper losses would expose the 100-period SMA at 159.85, which acts as the key medium-term support maintaining the bullish structure.

(The technical analysis of this story was written with the help of an AI tool.)