JPY Crashes As BOJ Keeps Easing

FXOpen

The Japanese yen (JPY) has been on the move lately, and the velocity of its depreciation is something not seen since 2014. In addition, the news broke out today that the Bank of Japan (BOJ) intends to conduct unlimited fixed-rate purchase operations for the 10-year JGBS (Japanese government bonds), a move that is part of the yield curve control measures adopted by the BOJ.

The news triggered a sharp rally in the JPY pairs, with the USD/JPY rising more than 300 pips since today's opening levels. So why are investors selling the JPY?

In a world where central banks are tightening their monetary policies, the BOJ is doing the opposite. For example, the Bank of England has already raised its rate to 0.75%. Moreover, the Fed in the United States delivered its first rate hike and is forecast to raise rates at every meeting. Furthermore, some are talking about a 50bp rate hike at the next meeting. Even the ECB, which has been putting the deposit facility rate into negative territory for several years now, signaled that it is time to normalize the policy.

But BOJ thinks differently, fueling the JPY's decline.

USD/JPY Close To 2015 Highs

While the rise in the USD/JPY pair is nothing short of impressive, it did not start today. A quick look at the daily chart reveals that the bullish trend originated in 2021, and the market did not look back anymore.

It consolidated in two continuation patterns – one pennant and one ascending triangle - pointing to higher levels to come. At this point, the pair is trading close to its 7-year high, and judging by the pace of the move, we should not be surprised to see further stops being triggered.

All in all, the JPY pairs' rally will likely continue as the BOJ's monetary policy diverges from the rest of the world. Unless something changes, investors will probably keep selling the yen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

Weekly Market Wrap With Gary Thomson: Nasdaq 100, NVIDIA, EUR/USD, Gold price Weekly Market Wrap With Gary Thomson: S&P500, US Dollar, Gold Price, PEP Stocks Weekly Market Wrap With Gary Thomson: UK100, Hang Seng Index, AUD/JPY, GBP/USD, USD/CAD Japanese Yen Goes on Volatility Drive after US Economic Uncertainty Surfaces Weekly Market Wrap With Gary Thomson: FTSE100, US Dollar, USD/JPY, BTC/USD

Latest articles

Commodities

WTI Crude Oil Price Shows Bullish Trend Ahead of OPEC Meeting

As the chart indicates, on Monday, the price of WTI crude oil rose by approximately 1%.

Reuters reports that the bullish sentiment is driven by:
→ the upcoming OPEC+ meeting scheduled for 2 June;
→ expectations of high fuel demand with the

Commodities

Can Last Week's Gold Price Rally Be Replicated?

Gold holds a particularly exceptional status among precious metals. Whilst it does have some use in the manufacturing of consumer durables and electronic products ranging from alloy compounds in wedding rings to terminals for connecting electrical cables in audio equipment,

Forex Analysis

USD/JPY Analysis: The Market is Indecisive Near Its Peak Since May 1

As the USD/JPY chart shows today:

→ The price is in an upward trend (indicated by the blue channel) that has been relevant since the beginning of 2024.

→ On Thursday, May 23, the exchange rate nearly reached 157.2 yen

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.