- The Japanese Yen loses ground despite the BoJ increasing its short-term rate by 15 basis points.
- The Bank of Japan decided to taper Japanese government bonds (JGB) buying to ¥3 trillion per month.
- The US Dollar faces challenges ahead of the Fed rate decision scheduled for Wednesday.
The Japanese Yen (JPY) loses ground against the US Dollar (USD) despite the Bank of Japan (BoJ) board members deciding to raise the short-term rate target by 15 basis points (bps) from the range of 0%-0.1% to 0.15%-0.25%, following the conclusion of its two-day monetary policy review meeting on Wednesday.
Additionally, the BoJ decided to taper Japanese government bonds (JGB) buying to ¥3 trillion per month as of the first quarter of 2026.
The US Dollar (USD) faces challenges ahead of the Federal Reserve’s (Fed) upcoming interest rate decision scheduled for Wednesday. While the central bank is expected to keep rates unchanged in July, there is growing anticipation of a rate cut in September. This speculation is putting pressure on the USD.
Daily Digest Market Movers: Japanese Yen trims gains ahead of BoJ decision
- Japan’s Chief Cabinet Secretary Yoshimasa Hayashi stated on Tuesday that the Bank of Japan and the government will closely coordinate. Hayashi emphasized that the BoJ will work closely with the government to implement appropriate monetary policies aimed at achieving the inflation target.
- Japan’s Retail Sales rose by 3.7% year-on-year in June, surpassing the forecasted 3.3% gain and reaching the highest level in four months. Meanwhile, on a monthly basis, Retail Sales increased by 0.6%, a slowdown compared to the previous 1.7% rise.
- Japan's Unemployment Rate was 2.5% in June, slightly lower than market forecasts of 2.6% and the rate observed over the previous four months. This marks the lowest jobless rate since January.
- Atsushi Mimura, Japan’s newly appointed Vice Finance Minister for International Affairs and top foreign exchange official stated in a Bloomberg interview on Monday that “while the recent depreciation of the Yen has both advantages and disadvantages, the demerits are becoming more noticeable.” Mimura mentioned that intervention is among the measures available to counter excessive speculation affecting the currency.
- Japan's top council has urged the government and the Bank of Japan to be mindful of the weak JPY when formulating policy. The council emphasized that the impact of a weak Yen and rising prices on consumption cannot be simply overlooked.
- Bank of America indicates that strong economic growth in the United States allows the Federal Open Market Committee (FOMC) to "afford to wait" before making any changes. The bank states that the economy "remains on robust footing" and continues to expect the Fed to start cutting rates in December.
Technical Analysis: USD/JPY moves below 153.00
USD/JPY trades around 152.80 on Wednesday. The daily chart analysis shows that the pair is testing the lower boundary of a descending channel. Additionally, the 14-day Relative Strength Index (RSI) is positioned slightly below 30, suggesting an oversold currency asset situation and a potential short-term rebound.
Immediate support is located near the lower boundary of the descending channel around the 152.60 level. A drop below this level could reinforce the bearish bias and push the USD/JPY pair lower, possibly revisiting May's low of 151.86. Additional support may emerge at the psychological level of 151.00.
On the upside, the pair tests the nine-day Exponential Moving Average (EMA) at 154.47, aligned with the "throwback support turned resistance" at the level of 154.50. Further resistance is anticipated near the upper boundary of the descending channel around 155.80.
USD/JPY: Daily Chart
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.08% | -0.11% | -0.06% | 0.55% | -0.08% | -0.10% | |
| EUR | 0.09% | 0.03% | 0.00% | 0.03% | 0.64% | 0.04% | -0.03% | |
| GBP | 0.08% | -0.03% | -0.04% | 0.00% | 0.60% | 0.01% | -0.06% | |
| JPY | 0.11% | 0.00% | 0.04% | 0.10% | 0.66% | 0.04% | 0.00% | |
| CAD | 0.06% | -0.03% | -0.00% | -0.10% | 0.59% | -0.01% | -0.08% | |
| AUD | -0.55% | -0.64% | -0.60% | -0.66% | -0.59% | -0.61% | -0.68% | |
| NZD | 0.08% | -0.04% | -0.01% | -0.04% | 0.01% | 0.61% | -0.06% | |
| CHF | 0.10% | 0.03% | 0.06% | -0.01% | 0.08% | 0.68% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
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