USD/JPY Eyes 160 as Bank of Japan Sticks to Ultra-Low Rates

Summary:
• USD/JPY trades near 157.70 as the BOJ sticks to ultra-loose policies. With the Fed's hawkish stance, the pair eyes the 160.00 level.

The USD/JPY pair remains in the spotlight as it continues to trade near multi-decade highs, hovering around 157.70 on January 9, 2025. The pair’s bullish momentum persists, driven by the widening policy divergence between the U.S. Federal Reserve and the Bank of Japan (BOJ). With the BOJ maintaining its ultra-loose monetary stance, the yen continues to face selling pressure, while the U.S. dollar benefits from its relative strength.

USD/JPY Technical Analysis

The USD/JPY remains firmly in an uptrend, with key levels in focus:

• Immediate Support:
  • 157.63: The 10-day Simple Moving Average (SMA) currently provides dynamic support.
  • 156.77: A key horizontal support level from recent lows.
• Resistance Levels:
  • 158.50: A recent high and the next hurdle for bulls.
  • 160.00: The psychological level that could act as a magnet for the pair in the coming days.

Outlook for USD/JPY

The USD/JPY remains well-supported as the policy gap between the Fed and BOJ widens. If the pair breaches 158.50, a move toward 160.00 could materialize swiftly. However, any unexpected actions from the BOJ, like changes to its yield curve control, might disturb the trend and create volatility.

Currently, traders are concentrating on U.S. inflation figures coming later this week, which may offer additional insights into the Fed’s rate trajectory and influence the dollar. Until that time, the optimistic outlook for USD/JPY stays strong, with support levels expected to draw buying interest.