USDJPY Hits Lowest Level Since March Amid Diverging Fed and BoJ Policies

USDJPY continues its steep decline, breaking through the psychological 150 support and reaching its lowest level since mid-March in early Thursday trading.

The dollar was weakened by a dovish Federal Reserve, which kept interest rates unchanged in its July policy meeting and hinted at the possibility of a rate cut in September, with further easing expected by the year’s end.

Conversely, the Bank of Japan raised interest rates to levels not seen in 15 years and announced plans to halve its monthly bond-buying starting in Q1 2023, further strengthening the yen, which had already been bolstered by recent interventions.

The Japanese currency is likely to advance further due to the policy convergence between the BoJ and the Fed, as the Bank of Japan moves towards policy normalization while the Fed prepares to cut rates.

USDJPY is on track for its fourth consecutive substantial weekly loss, having fallen 6.7% in July, marking the biggest monthly decline since November 2022.

Daily technical indicators are firmly bearish but oversold, suggesting that the downtrend may pause for consolidation before continuing.

The breached 150 level now serves as immediate resistance, followed by the 200-day moving average at 151.66, which is expected to cap any upward corrections.

Res: 150.33; 151.10; 151.66; 152.06
Sup: 148.50; 146.48; 145.89; 145.37