Yen Plunges On BOJ Dovish Talk, Expect More Weakness

Fundamental Analysis

* Yen Turbulence: The Japanese yen continue to experience depreciation against other currencies as the central bank’s reaffirmation of a dovish near-term outlook largely eclipsed any positive impact despite with BoJ interest rate hike. On Tuesday, the Bank of Japan raised interest rates by 0.1%, marking its first increase in 17 years. Additionally, it ceased its negative interest rate policy (NIRP) and yield curve control (YCC) mechanism. However, Governor Kazuo Ueda stated that the BOJ would continue purchasing Japanese government bonds at a consistent rate and emphasized the necessity of maintaining a dovish stance for a certain period to bolster the Japanese economy.

Technical Analysis

* Technical Breakout: USD/JPY was traded higher following recent breakout above previous resistance level 150.85. MACD which illustrate continued bullish momentum with recent bullish market structure breakout indicate that the pair could extend its upward momentum.

* Resistance And Targets: If the bullish momentum persists, the price is likely to head towards the resistance level 151.95. Conversely, if the price breaks back below 150.85, it may indicate a technical correction and head back towards the support level of 148.95.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, investors will shift their focus to the Federal Reserve, as the trajectory of U.S. interest rates remains a crucial factor. Any decline in the dollar resulting from potential interest rate reductions by the Fed would benefit the yen.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Japan Data, Fed updates and any shifts in the US Dollar’s strength. by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.