Bank of Japan: The Difficult Normalization

The yen's fall beyond 162.5 suggests that the BOJ's latest rate hike has done little to change the broader trend. While policymakers continue to normalize policy, they are doing so cautiously to avoid putting too much pressure on Japan's bond market and heavily indebted public finances. That slow approach has kept the wide interest rate gap with the U.S. largely intact.

With U.S. economic data remaining strong and markets expecting further Fed tightening, the dollar continues to attract buyers. At the same time, traders are increasingly watching for possible intervention from Tokyo, especially during periods of thinner market liquidity. Still, recent experience suggests intervention alone is unlikely to reverse the yen's longer-term weakness without a more aggressive shift in BOJ policy.

Initial resistance stands at 163.00, while the first support is at 161.70.

R1: 163.00 | S1: 161.70
R2: 163.80 | S2: 160.50
R3: 164.50 | S3: 159.00