The BOJ has gotten the ball rolling on the Japanese yen

And we’re off to the races for the Japanese yen. It has finally reached a point where traders are now starting to price in the BOJ’s next steps, either later this month or at the latest next month. USD/JPY has dipped much lower after the technical breakdown yesterday, tracking to near 148.00 now. So, what’s next for the pair?

The BOJ has gotten the ball rolling once again amid more hawkish murmurs this week. They are also touting stronger results from the spring wage negotiations and the early signs are looking optimistic.

The thing about shorting USD/JPY too early was that the negative carry made it rather unappealing. And when you throw in the fact that the BOJ has disappointed yen bulls rather thoroughly in 2023, you can see why traders were hesitant to get on board with the trade in the weeks before.

But now, it looks like things are being put into motion already. USD/JPY will be looking towards its 100-day moving average (red line) next at 147.73. Thereafter, there is the 38.2 Fib retracement level offering some minor support at 146.82 but the pair is likely to look past that and angle towards the 1 February low near 146.00. Alongside the latter, the 200-day moving average (blue line) will be a focus at 146.11 currently.

The big question now though is, will the BOJ disappoint yen bulls once again? The odds are suggesting that they aren’t likely to pull the same stunt as they did last year, considering that the window to pivot on policy is closing in on them. But then again, there were many times during 2023 that one can argue that they should’ve already took bolder steps in making the change happen. Yet, that did not materialise.