USD/JPY Defies Gravity: Bulls in Control Despite BOJ Rate Hikes
The dollar-yen pair has been riding an upward trend channel since 15th January 2023, maintaining a clear bullish structure with higher highs and higher lows. Even with the Bank of Japan (BOJ) raising interest rates to 0.5%—the highest since October 2008—the yen continues to weaken. The culprit? A surging dollar, fuelled by President Trump’s tariff measures, which have reignited inflationary concerns.
According to Trading Economics, the US has slapped 25% tariffs on imports from Mexico and Canada, alongside a 10% levy on Chinese goods. In response, affected nations have introduced countermeasures. While Japan itself isn’t in Washington’s crosshairs, its export-driven economy remains highly sensitive to global trade disruptions.
Currently, USD/JPY is trading mid-range within its trend channel, fluctuating between 154.001 and 155.883 this week. Over the past two months (1st December 2024 – 5th January 2025), price action has ranged from a low of 148.638 to a high of 158.875. The bulls remain firmly in control, and if they manage to breach 158.875, we could see a push to uncharted territory—164.051, or even the psychological milestone of 170.823, marking historic highs.
However, the market doesn’t move in a straight line, and we certainly don’t have a crystal ball. If the bears step in and break below 148.638, a deeper retracement could take us towards 134.287, with further downside potential near 127.604 should selling pressure intensify.
Timing these moves, whether bullish or bearish, is no small feat. Market forces will dictate the pace, and as always, staying agile and vigilant remains key. Trade wisely!