USD/JPY Awaits Next Move After BOJ Rate Decision

The Bank of Japan has raised interest rates by 25 basis points to 1%, as widely expected. With the rate decision now behind the market, attention has shifted to the BOJ's guidance on future policy and quantitative tightening. Traders will be watching closely for any signals on the pace of further policy normalisation, as these could have a major impact on the Japanese yen.

Despite falling oil prices, lower US bond yields, and easing geopolitical tensions, the yen has struggled to strengthen as carry trade demand and record speculative short positions continue to support USD/JPY. If the BOJ maintains a cautious tone, the pair could remain supported. However, a more hawkish outlook could trigger profit-taking in yen shorts and provide fresh strength to the Japanese currency.

From a technical perspective, USD/JPY remains in a steady uptrend, and the price has formed a triangle pattern. If price breaks above the pattern, the upside target will be the nearby resistance at 160.60. A break to the downside would expose the low of the triangle around 159.50. Momentum indicators continue to favour a bullish bias unless the BOJ delivers a meaningful shift in policy expectations.

USD/JPY 1-Hour Chart