Japanese Yen Slides Nearly 1% Amid Renewed Monetary Policy Uncertainty

USDJPY advanced 0.9% on Tuesday after Japan’s Prime Minister Takaichi voiced concerns over further interest rate hikes by the Bank of Japan, a stance that contrasts with broad market expectations for borrowing costs to rise toward 1% in the first half of 2026, with the initial move potentially coming as early as April.

Renewed uncertainty over the projected monetary policy path weighed on the yen, pushing it to a two-week low against the US dollar.

Technically, Tuesday’s surge reinforced the bullish structure following the rebound from the February 12 low at 152.26, which had paused in a modest two-day pullback. The pair extended above the 61.8% Fibonacci retracement of the 157.65/152.26 decline at 155.60 and broke through the base of the daily Ichimoku cloud at 156.13, adding to positive signals.

Momentum eased after the pair tested the cloud base, a level often seen by traders as an attractive area for profit-taking following a strong rally. The stochastic is overbought, while the 14-day momentum indicator continues to trend higher but remains below the centerline, suggesting room for a near-term pause.

A firmer technical backdrop, supported by underlying fundamentals, points to the likelihood of consolidation before a renewed attempt to penetrate deeper into the daily cloud, which remains relatively thick and could pose additional resistance. A stronger move into the cloud would bolster prospects for a full retracement of the 157.65/152.26 decline.

On the downside, the broken 61.8% Fibonacci level at 155.60 now acts as immediate support, followed by the more significant 154.95 area, where the 100-day moving average aligns with the former 50% retracement level.

Res: 156.13; 156.38; 157.00; 127.40
Sup: 155.60; 154.95; 154.73; 154.32