The US dollar gained against the Japanese yen for the fourth successive session on Wednesday, with the latest gain driven by interest rate decisions by the Bank of Japan (BoJ) and the Federal Reserve. The USDJPY currency pair traded at 149.95, up by 0.4% on the day. That brought its gains in the last five sessions to 1.1%, with the dollar’s relative safe haven status giving it some edge.
BoJ monetary policy committee members voted to retain interest rates at 0.5%, dashing expectations of a potential rate hike following a series of upbeat Japanese economic data. Furthermore, the nation’s labour unions had recently negotiated wage and salaries hikes that were expected to push the BoJ to hike interest rates.
However, Tuesday’s decision is seen as a precaution by the central bank to ensure that the country does not slide back to deflationary pressures seen in 2024. The result is increased pressure on USDJPY ahead of the Fed’s interest rate decision set to be announced later on Wednesday.
Analysts expect the rates to stay unchanged, but there’s a cut wouldn’t be a total surprise considering the economic troubles triggered by the ongoing trade tariff war. In addition, the dollar’s relative safe haven status compared to the yen is boosted by an uptick in war in the Middle East.
USDJPY Prediction
USDJPY pivots at 149.70 and the momentum favours the upside to prevail. The currency pair will likely meet initial resistance at 150.20. However, an extended control by the buyers will clear that barrier and likely test the next hurdle at 150.60.
Alternatively, the action could go to the downside if the pair breaks below 149.70. With the sellers in control, the first support is likely to be established at 149.22. The upside narrative will be invalid if the pair breaks below that level. In addition, the resulting momentum could result in further losses to test the second support at 148.83.
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