USDJPY Drops Sharply After BoJ Rate Hike and Bond-Buying Plan

The USDJPY accelerated lower in early European trading on Wednesday following the Bank of Japan’s decision to raise interest rates from 0.10% to 0.25% and unveil a plan to halve its bond-buying program.

This move boosted the yen’s strength, building on recent interventions by Japanese authorities.

The fresh weakness pushed the USDJPY to its lowest in almost 4 ½ months, breaking significant supports at 152.39 (61.8% Fibo retracement of 146.48/161.95) and 151.66 (200DMA), generating a fresh bearish signal. Confirmation of this signal is anticipated if the pair closes below these levels.

Bears are now targeting 150.13/00 (76.4% Fibo / psychological), and a break here could lead to a deeper correction of the larger uptrend from 127.22 (2023).

However, oversold daily studies may provide headwinds to bears, potentially pausing the fall for consolidation above the pivotal 150 support zone, with limited upticks offering better selling levels.

Adding to the bearish outlook is the formation of a reversal pattern on the monthly chart, with the pair on track for its biggest monthly fall since October 1998.

Res: 151.66; 152.39; 153.00; 153.89
Sup: 150.00; 148.90; 147.42; 146.48