Jpy Extends Its Losses Despite Hawkish Boj

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Jpy Extends Its Losses Despite Hawkish Boj

Japanese Yen (Jpy) Extends Its Losses, Boj Remains Hawkish

The Japanese Yen (JPY) is on the back foot against the US Dollar for the 2nd day in a row. However, experts believe that the downside will be limited as the Bank of Japan maintains a hawkish stance.

Also, the statements from the Federal Reserve and the BoJ officials are also at a 180 degree from each other. The BoJ is talking about hiking the policy rate while the Federal Reserve is working to lower it. These contrasting comments have also led to the recent downside in USD/JPY as traders are trying to digest it all.

Boj Shows Commitment To Hike Rates

Recently, BoJ Ueda talked about how they can raise the rates from the current level as long as their economic forecasts are accurate.

Meanwhile, Powell is talking about cutting rates, and we can expect the first rate cut in 2024 in the next few weeks. Also, Fed Daly recently talked about how the time has come to adjust the policy rate. According to experts, the first rate cut in September will likely be a quarter percentage (0.25%).

Right now, USD/JPY is seen near the 144.90 level on Tuesday, with a bearish bias in the long-term. However, the RSI on the D1 chart of USD/JPY shows a reading of 30, this means the bears remain in charge.

On the way down, the support level for USD/JPY can be found at around 141.60, which is the 7-month low. If the JPY bulls break this level, the next stop for USD/JPY will be 140.25.

On the way up, the first barrier is in the form of 9-EMA, located near 145.67. If the US Dollar bulls pierce this level, the next stop will be around 154.50.

Over all, the policy divergence between the BoJ and the US Federal Reserve is now growing. As a result of this, we expect the USD/JPY to go lower towards 135.00, 130.00, and even lower.

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