The Japanese Yen (JPY) faced renewed selling pressure following the Bank of Japan's (BoJ) policy announcement, plunging to a multi-decade low against the US Dollar (USD) in Friday's Asian session.
As expected, the BoJ kept its policy unchanged but revised down its growth forecast for the fiscal year 2024. This lack of decisive action by Japanese authorities, coupled with a generally optimistic risk sentiment, weighed heavily on the safe-haven JPY.
Meanwhile, the USD saw some buying interest as market participants reacted to hawkish expectations from the Federal Reserve (Fed), reversing some of the losses from the previous day driven by softer GDP figures.
Moreover, expectations of a sustained interest rate differential between Japan and the United States suggest a bullish bias for the USD/JPY pair. However, traders may prefer to await the release of the US Personal Consumption Expenditures (PCE) Price Index before committing to new directional positions.
From a technical standpoint, further upside momentum beyond the recent high near 155.75 could propel the USD/JPY pair towards the 156.00 level. Nevertheless, caution is advised for bullish traders as the Relative Strength Index (RSI) on the daily chart signals extreme overbought conditions.
On the downside, support is expected around the 155.35-155.30 range, followed by the psychological level of 155.00. A breach below this level may lead to a test of the short-term resistance-turned-support around 154.70, with further declines potentially targeting the 154.00 mark and last Friday's swing low around 153.60-153.55.
Paraphrasing text from "FX Street" all rights reserved by the original author.
