USD/JPY opened the week near 157.48 as the yen rose after the Bank of Japan held its key rate at 1.25%. The central bank said core inflation has reached its 2% target, which strengthened expectations of a rate hike as early as December.
USD/JPY begins the week around 157.48, pressured by a yen that rose for three consecutive sessions last week. The gains followed the Bank of Japan's decision to hold its key interest rate at 1.25%, as expected.
BoJ says core inflation has reached its target
The central bank sent a more important signal about future policy: core inflation has reached the 2% target. This has strengthened expectations that the next move could be a rate hike as early as December.
The board approved the decision by an 8–1 vote. Board member Hajime Takata advocated an immediate rate hike to 1.5%, noting that economic conditions have entered a new phase and require a faster move towards a neutral rate.
Tech sell-off and bond inflows add to yen demand
The yen also gained support from demand for safe-haven assets after weak reports from major technology companies. Those reports again raised concerns about the scale of AI investment and triggered another stock market sell-off.
Global asset managers' return to the Japanese debt market was another positive factor for the yen. Improving domestic demand and more favourable monetary policy expectations are increasing the appeal of higher Japanese bond yields.
USD/JPY eyes a correction toward 157.38
On the four-hour chart, USD/JPY continues to form an upward corrective structure after completing the decline towards 156.07. Buyers pushed the price back up to 157.98, but the downward resistance line caps further upside.
The main scenario for Monday envisages the decline ending around 157.38, followed by a resumption of growth. A move above 158.08 would strengthen upside potential, with the main medium-term target at 160.08.
A break below support at 157.14 would weaken this scenario and open the way towards 156.07.
Source: ActionForex
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