Mizuho Securities strategists Masafumi Yamamoto and Masayoshi Mihara noted in a report that markets have priced in expectations for the Bank of Japan's rate hike at today's policy meeting. However, if Governor Kazuo Ueda fails to signal the timing of the next rate increase, the yen could face downward pressure.
Under a dovish hike scenario—seen as more likely—the USD/JPY pair may test the 157 level, potentially rising toward the recent high of 157.89 touched on November 20. Conversely, if Ueda’s remarks bring forward market expectations for the next hike, focus will shift to whether USD/JPY can break below the 154.35 level reached on December 5.
With overseas markets entering holiday periods, forex trading may stabilize or extend trends following the BOJ’s policy adjustment.
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