The Japanese Yen continued to weaken against major currencies on Wednesday, despite the Bank of Japan (BoJ) raising its policy rate to a 30-year high of 1.00% last week [2]. The EUR/JPY pair fell 0.08% to 183.70, dropping below the 100-day Simple Moving Average (SMA) at 184.60 and reaching a daily high of 183.92 [1]. This decline comes amid growing speculation that Japanese authorities may intervene in the foreign exchange markets, especially as Japan's producer inflation exceeded estimates and remained above the 3% threshold [1].
The USD/JPY pair also climbed, with the article noting that the Yen is sliding toward generational lows even after the BoJ's rate hike [2]. The persistent weakness is attributed to the wide interest rate gap between the BoJ's 1.00% and the US Federal Reserve's (FOMC) near 3.75%, a spread of approximately 275 basis points [2]. The Fed's recent hawkish stance, including indications of a possible rate hike rather than a cut, has further pressured the Yen [2].
Technical analysis for EUR/JPY indicates a bearish momentum, with the next support levels at 183.00 and the 200-day SMA at 182.36. If these are breached, the February 12 swing low of 180.81 could be targeted [1]. On the upside, resistance is seen at 184.00, followed by the 100-day SMA and the 50-day SMA near 185.32, with the June 17 daily high at 186.32 as a further cap [1]. For USD/JPY, resistance is at 162.00 and 163.00, while support lies at 161.50, 161.00, and the 50-day EMA around 159.50 [2]. The bias remains higher for USD/JPY, with the main risk to the uptrend being potential intervention by Japan's finance ministry rather than further BoJ action [2].
Market participants are closely watching upcoming data releases, including the US core Personal Consumption Expenditures Price Index (PCE) and the Tokyo Consumer Price Index (CPI). A strong US PCE print could widen the rate gap further and push USD/JPY higher, while a soft Tokyo CPI would signal that the BoJ is unlikely to hike again soon, potentially leaving the Yen vulnerable [2].
No analyst opinions or forward-looking statements beyond the risk of intervention and the impact of upcoming economic data were provided in the sources.
CONCLUSION
Despite the BoJ's rate hike to a 30-year high, the Japanese Yen remains under significant pressure due to the wide interest rate differential with the US and persistent market expectations of further US monetary tightening. The risk of intervention by Japanese authorities is rising as the Yen approaches multi-decade lows, making upcoming economic data releases critical for near-term currency direction.