- The USD/JPY price analysis shows increasing pressure within the Bank of Japan to hike interest rates.
- BoJ policymakers Hajime Takata and Naoki were ready to hike interest rates.
- The dollar continued its recovery after the Fed meeting.
The USD/JPY price analysis shows increasing pressure within the Bank of Japan to hike interest rates, which briefly boosted the yen on Friday. However, dollar strength after the expected Fed rate cut soon undid the gains in the yen.
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The Bank of Japan on Friday kept interest rates steady as expected. However, policymakers Hajime Takata and Naoki Tamura voted against the move. Instead, they were ready to hike interest rates by 25-bps. The dissent came as a surprise to many and led to a rally in the yen.
“The dissent from Takata and Tamura highlights growing hawkish pressure inside the BOJ,” said Charu Chanana, Chief Investment Strategist at Saxo.
“While the majority still favour a steady path, the presence of two board members voting against today’s decision suggests the debate is tilting toward quicker normalisation.”
However, the yen rally was brief, as the dollar continued its recovery after the Fed meeting. The central bank kept interest rates unchanged and signaled more to come. However, Powell also emphasized that they would keep monitoring inflation risks.
USD/JPY key events today
Traders are not looking forward to any key releases from Japan or the US. Therefore, they will keep absorbing policy decisions.
USD/JPY technical price analysis: Bears give up after false breakout
On the technical side, the USD/JPY price is back in its range after a false bearish breakout. It trades above the 30-SMA, with the RSI above 50, suggesting bulls are currently in the lead. Therefore, the price will likely soon climb to retest the range resistance.
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USD/JPY has maintained its sideways move between the 146.50 support and the 149.00 resistance. However, bears recently attempted to break out of this consolidation. The price briefly dipped below the range support but was quickly rejected. As a result, it made a large bottom wick and pulled back into the range.
Afterwards, bulls took over by pushing the price above the 30-SMA. With bulls in the lead, the price will soon challenge the range resistance. If it holds firm, the sideways move will continue. On the other hand, a breakout would likely start a bullish trend.
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