USD/JPY Jumps as BOJ Hike Disappoints Yen BullsUSD/JPY jumped as much as roughly 1.2% on Friday, September 18, trading near 157.90 after the BOJ raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years. The hike itself was fully expected. The surprise came from the 7-2 vote and the lack of a more forceful signal that additional hikes are imminent. Governor Kazuo Ueda kept the door open to further tightening, but markets focused on the dissent and the absence of a clear acceleration in the hiking cycle. The result was classic “buy the rumor, sell the fact” behavior in the Japanese Yen.
The U.S. side made that reaction even more violent. The Fed raised rates this week to 3.75%-4.00% and signaled that additional tightening remains on the table, keeping Treasury yields elevated and preserving a wide rate advantage for the U.S. Dollar. That leaves the BOJ in an awkward spot: it is tightening faster than before, but still not fast enough to close the policy gap. Intervention risk therefore stays relevant if USD/JPY pushes back toward 160, especially after the coordinated U.S.-Japan action earlier this summer. Today’s move says the market wants more than a BOJ hike. It wants a credible path toward several more.
USD/JPY is in a reflex rally after a violent breakdown, and the chart still looks damaged. The pair flushed from roughly 160.00 to the 153.00 area, then snapped back to 156.70. That rebound has reclaimed the fast moving averages, which is constructive at the margin, but price is still underneath the heavier 50-, 100-, and 200-day resistance cluster sitting roughly in the 158.00-159.00 zone. Until that area is recovered, this reads more as a bounce inside a broken trend rather than a new leg higher. The cleaner bearish setup is selling a failed push into 157.50-158.50. That zone catches the longer moving averages and the underside of the prior breakdown. If USD/JPY stalls there, the first downside level is 155.50, then 154.00, with the recent low around 153.00 as the bigger test.
USDJPY Jumps as Ueda Fails to Offer Rate Hike TimelineIt's probably a peculiar spot for the Bank of Japan wanting or trying to coax JPY strength and hawkish policy. And after a 75-minute briefing at last night's rate hike markets walked away unimpressed with the BoJ's commitment to taming inflation as the Takaichi government continues to spend with debt-to-GDP ratios north of 200%.
The 155 support that showed ahead of the FOMC meeting has since proven to be a launching pad, and price has tested the 158.00 handle as shorts were squeezed aggressively after last night's rate hike announcement.
This story is far from over, however, and after the reaction to Scott Bessent's 'bet against me if you want' comment last week, the US Treasury Secretary is likely emboldened especially if we do see a push up towards the 160.00 handle in the pair. He also said that he had asymmetric information and he knew what the Bank of Japan would do, which was a constraining factor on the long side as there was wide expectation that Kazuo Ueda would have something more to offer than just the 25 bp hike that was already well priced-in.
The big question for traders at this point is where the line in the sand is? We saw a dual intervention at 164.00 so that seems an obvious spot, we got a comment from Katayama at 160.00 regarding cooperation and partnership which helped to lead to the slide two weeks ago.
But, as has been the case since the initial dual intervention in July, bulls have motive to jump in after a slide when support sets, just like we saw last week. The carry is still positive and as long as long-term bulls aren't scared of a shift in underlying fundamentals, there's still reason to establish longs at or around lows.
The math changes as price nears resistance points, however, as the risk-reward on the long side grows less attractive and that's what's on the table for next week, along with what Scott Bessent or Katayama might say on the matter. - JS EURJPY: news flow leaning bearish — the net read
EURJPY did not get one story today, it got several, and they do not all point the same way. Weighed against each other — new against old, and tracking which ones have already faded:
−− BOJ governor Ueda says will continue to tighten policy in response to economic, price developments
− Asia FX mixed as yen slides despite BOJ rate hike (fading)
− CNBC Daily Open: Hike, hold, hike
50 stories were weighed in this window; the 3 carrying the most weight are listed.
Net read: −−− leaning bearish — top of our scale.
What this is: a measure of which way the *news* is leaning right now — not a promise about price. A read being right and a read still being worth taking are two different things: once price has travelled a long way from where the read was published, it is stretched, and a lean that is stretched is a no-chase rather than an invitation.
Weight is not fixed either. A fresh headline lands, the balance tips, and the net read can flip inside an hour — that shift is the part worth watching, not the first print.
I will post an update under this idea once the market has had time to speak, either way.
(Informational only — not financial advice, not a signal.)
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