Usdjpy Rallies Higher On Bond Buying

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Usdjpy Rallies Higher On Bond Buying

Usd/Jpy Rallies Higher On Boj Bond Buying

bullish rally was seen in the USD/JPY, sending the pair towards the 155.90 on Friday. It looks like the JPY has come under pressure once again, paving the way for the USD to turn higher.

The upside in the USD/JPY is sparked by the BoJ's decision to buy government bonds. This was a surprise for the markets as they were expecting the BoJ to cut back on debt purchasing.

Bank Of Japan Continues To Support Economy

According to market sources, the Bank of Japan is likely to reduce its bond-buying starting from June. However, the BoJ governor has passed comments on how the Bank has no immediate plans when it comes to selling the bonds.

former chief economist from BoJ recently gave an interview to a media source. According to him, the BoJ will likely raise the interest rates a total of three times in 2024. He also added that the next rate hike will take place at the June 2024 meeting.

He made it clear that the BoJ needs to do a lot of work in order to correct the current policy of excessive monetary easing.

look at the DXY (US Dollar Index) shows it is trading near 104.60 with a slightly bullish bias. Earlier, the DXY had sunk lower towards 104.08 but has now recovered some lost ground.

The US Federal Reserve (Fed) is also maintaining a hawkish stance when it comes to the rates as they don't want to rush into the rate-cutting phase.

Raphael Bostic, the Fed's president from Atlanta, recently reiterated the need to be cautious & patient when it comes to rate cuts. He added that the US economy still faces substantial price pressure (inflation), which requires an environment with higher rates.

The current fundamental outlook favors an upside in the USD/JPY as the Japanese Yen remains on the back foot due to BoJ's policy.

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