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Japanese Yen Spikes Lower as the BOJ Holds Back FX Intervention Threat. Where to Next for USD/JPY?

Japanese Yen Spikes Lower as the BOJ Holds Back FX Intervention Threat. Where to Next for USD/JPY?

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  • Japanese Yen spikes lower as the Bank of Japan keeps policy settings unchanged
  • Absence of clear, strong FX intervention warning may have triggered Yen selloff
  • USD/JPY probing above key 145.00 threshold but struggling to follow-through
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The Japanese Yen spiked lower, with the benchmark USD/JPY exchange rate probing above the closely watched 145.00 figure, after the Bank of Japan issued a relatively muted monetary policy announcement. The central bank kept all the key elements of its stance unchanged. The target short-term lending rate was kept at -0.1 percent and the target for the yield on the 10-year Japanese Government Bond (JGB) remains at 0 percent.

In the policy statement, the BOJ said it will end Covid-era stimulus in stages even as it extended these funding facilities for 3-6 months. In the same breath, officials said they would add to easing without hesitation, if needed. The latest macro developments received some obligatory lip service but prompted no discernible action. Underlying price pressures and inflation expectations were acknowledged as increasing, for example.

The catalyst for the Yen’s downward lurch seems to be the absence of specific language threatening to counter such moves. The markets have been leery to push prices higher over the past week, pinning USD/JPY at 24-year highs near 145. That is after the central bank demonstratively pinged its dealing partners for a quote to buy the local currency there last week. This warned traders that the BOJ may seek to defend this level.

Governor Haruhiko Kuroda and company offered no fuel for such speculation with this announcement, saying only that they are paying due attention to FX market moves and their impact. This might be flagging that – as with much of the period following the 2008 financial crisis – the Bank is more concerned with managing the pace of Yen moves rather than their direction.


USD/JPY 5min chart created using TradingView


Looking at overall positioning from here, a daily close above the 145 figure may trigger upward follow-through, with initial resistance thereafter approximated by the 38.2% Fibonacci extension at 147.08. However, negative RSI divergence warns of ebbing upward momentum. A turn back below the September 9 low at 141.50 may bring resistance-turned-support at 139.39 into focus as the next key downside barrier.


USD/JPY daily chart created using TradingView


--- Written by Ilya Spivak, Head of Greater Asia at

Please contact Ilya at @IlyaSpivak on Twitter

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