USD/JPY Rises as Expectations of Persistent Fed-BoJ Rate Disparity Strengthen

The USD/JPY currency pair witnessed a significant upswing, rising close to 1% in response to the Bank of Japan's (BoJ) latest policy shift. Despite this, the central bank's recent communications suggest a dovish outlook, intimating only moderate tightening in future policies. This stance is expected to maintain the substantial interest rate differential between the Federal Reserve (Fed) and the BoJ, ultimately benefiting the US dollar.

Recovery Momentum and Technical Indicators

The upward trajectory of USD/JPY has surged from its support base at 146.48, taking it past the psychologically important 150 level. This move nearly erases the previous downward correction from 150.88 to 146.48, fueling a bullish market sentiment. A secure close above the 150 threshold could further cement this bullish structure, setting the stage for a potential rise towards the 2024 high of 150.88. A breach of this level might even challenge multi-decade peaks in the 151.90/94 zone.

Analyses of daily trading metrics provide a positive outlook, although caution is advised as overbought conditions coupled with the 14-day momentum remaining in negative territory suggest that the upward push could encounter resistance.

For the immediate future, market observers anticipate that dips will hold above the 150 mark, and any significant declines should not fall below the 20-day moving average (DMA) of 149.37, in order to sustain the prevailing bullish interest.

Anticipation of Federal Reserve's Next Move

Attention is now shifting towards the upcoming Federal Open Market Committee (FOMC) meeting. Investors are keen to garner additional insights into the Fed's forthcoming actions, with a rate cut in June already being widely anticipated.

Moving forward, crucial levels of resistance for the USD/JPY pair are identified at 150.88, 151.43, 151.90, and 151.94. In contrast, key support levels to watch include 150.00, 149.37, 148.92, and 148.35.

USDJPY, Fed, BoJ, Exchange, Rates