The Japanese yen clawed back strength against the dollar on Friday after hitting a two-week low, as traders increased bets on faster Bank of Japan interest rate hikes while the greenback showed weakness. USD/JPY held modest intraday losses through early European trading, maintaining a position above 159.00 but pulling back from Thursday’s two-week high.
The yen’s recovery reflects growing market expectations that the BoJ may accelerate its monetary policy normalization amid persistent inflation pressures. This shift in sentiment comes as the dollar faces headwinds across major currency pairs. The 159.00 level now serves as critical near-term support for USD/JPY, with traders closely monitoring BoJ commentary for signals on the timing and pace of future rate increases.
Currency strategists note the yen remains vulnerable to sharp moves as positioning adjusts to Japan’s evolving policy stance versus Federal Reserve expectations.
FXnCO Insight
Traders should monitor the 159.00 support level closely, as a break below could accelerate yen buying and trigger stop-loss orders in crowded USD/JPY long positions.
Source: FXStreet