USD/JPY Near Multi-Month Highs as BoJ Tightening Fuels Yen Volatility

As a reminder, the regulator raised its key interest rate by 25 basis points to 0.75%, the highest level in the past 30 years. Officials also signaled their readiness to continue tightening monetary policy, expressing confidence that inflation is moving steadily toward the 2.0% target, supported by wage growth. However, during the press conference, BoJ Governor Kazuo Ueda refrained from commenting on the pace of further rate hikes, noting that future decisions would depend on how the economy responds to each individual adjustment. This cautious stance disappointed investors and triggered significant yen selling.

At present, the upside momentum in USD/JPY has slowed somewhat after Japan’s top currency diplomat Atsushi Mimura and Chief Cabinet Secretary Minoru Kihara voiced concerns about “one-sided and sharp” movements in the yen. They also warned that authorities are prepared to take appropriate action to prevent further downside, a clear hint at the possibility of renewed currency interventions.

Overall, the fundamental backdrop continues to favor higher prices. However, further gains could be limited if market participants receive economic data or verbal signals pointing to another near-term reduction in borrowing costs by the US Federal Reserve.

Support and resistance levels

The instrument is approaching the 157.81 level (Murray [+1/8]). A firm break above this mark would open the way for continued growth toward 159.37 (Murray [+2/8]) and 162.00 (the area of two-year highs). Conversely, a breakdown below 154.68 (Murray [7/8], the lower Bollinger Band) could trigger a decline toward 151.56 (Murray [5/8]) and 150.00 (Murray [4/8]).

Technical indicators continue to point to a sustained uptrend: Bollinger Bands are turning higher, the MACD is rising in positive territory, and the Stochastic oscillator is approaching overbought levels. This suggests the possibility of a corrective pullback, although its downside potential appears limited.

Resistance levels: 157.81, 159.37, 162.00.

Support levels: 154.68, 151.56, 150.00.

Trading scenarios and USD/JPY forecast

Long positions may be considered above 157.81 with targets at 159.37 and 162.00 and a stop-loss at 156.70. Time horizon: 5–7 days.

Short positions may be considered below 154.68 with targets at 151.56 and 150.00 and a stop-loss at 156.90.