- BoJ hikes rates to highest level since 1995
- Yen lingers at 160 despite rate hike
- Governor Ueda absent from meeting
- USDJPY still bullish on D1 chart
The Bank of Japan raised interest rates by 25 basis points to 1.0% today — the highest level since 1995. The decision passed 7-1, with one dissenting board member calling for a hold.
Oh, and the governor was in hospital. Japan's central bank doesn't do drama the easy way.
Markets had almost fully priced in the move, which is precisely why the yen's reaction was so underwhelming: a brief dip in USD/JPY, quickly reversed. As of writing, the pair is still pinned near 160.
Why isn't the yen stronger?
Simple arithmetic. Japan's rates just hit 1.0%. US rates are sitting well above that. As long as that gap stays wide, the dollar remains the higher-yielding option — and traders will keep favouring it. A BOJ hike helps the yen at the margins, but it doesn't close a gap that wide overnight.
There's also a bigger macro twist this week: the Iran peace deal. Easing geopolitical risk and falling oil prices are weakening the dollar broadly — which should help the yen. But record short positioning against JPY means traders may be in no rush to cover. Watch for potential profit-taking to provide some relief.
Bank of Japan
- Raised rates 25bps to 1.0% — highest since 1995
- First hike since December, passed 7-1
- Governor Ueda was absent, hospitalised ahead of the meeting
- BofA forecasts further hikes in Oct '26, Mar '27 and Jul '27, with a terminal rate of 1.75% by end-2027
USD/JPY
- Pair remains stubbornly near 160 despite the hike
- Japan spent ~¥11.7 trillion ($72bn) on yen intervention last month — with limited lasting effect
- Record short positioning on JPY means a squeeze could come if hawkish guidance lands
What's Next
The hike itself was never really the story — it was almost certain.
The story is what the BOJ signals next. Any hawkish language around the pace of future tightening could squeeze JPY short sellers hard and push USD/JPY meaningfully lower.
Technical snapshot
The pair holds an uptrend on H4, trading above trendline support near 159.55. Momentum is cooling though — suggesting the market is waiting for a fresh catalyst rather than pressing higher.
- Bullish: Hold above 160.00 opens path toward 160.40–160.60
- Bearish: Break below 160.00 exposes 159.55 and trendline support
- Bias: Neutral to bullish while above 160.00