- The Bank of Japan’s upcoming policy meeting, with a 90% likelihood of a rate hike, has driven the Japanese yen to its highest level in four weeks, sparking significant market interest.
- Potential market disruptions, including Japan’s Finance Minister signaling intervention and U.S. political developments, add complexity to the forex outlook as traders closely monitor the yen.
The Bank of Japan (BoJ) will hold its first policy meeting of the year next week, with markets pricing in a 90% likelihood of a rate hike on January 24.
Last year, BoJ rate hikes contributed to the Yen carry trade unwind in early August, coinciding with Bitcoin’s decline to $49,000.
This week, the Japanese yen strengthened toward 155.5 per dollar, its highest level in four weeks, driving prices to range lows and suggesting potential further downside. A daily close below the 20-day EMA has brought the 50-day EMA and the monthly pivot point into focus.
One potential hurdle for a rate hike could stem from US political developments. Former U.S. President Donald Trump is set to begin his second term in office on Monday, with expectations of executive orders that may disrupt financial markets.
Additionally, traders must contend with Japan’s Finance Minister this week reaffirming the government’s readiness to take “appropriate action” to support the yen.
For the exact date and time of these major economic events, import the BlackBull Markets Economic Calendar to receive alerts directly in your email inbox.
