The US dollar broke above the closely watched 150.00 level against the Japanese yen for the first time in six months on Thursday, as the Bank of Japan (BOJ) maintained its ultra-loose monetary policy despite rising inflation pressures domestically.
BOJ Holds Firm on Yield Curve Control
At its latest policy meeting, the BOJ kept its yield curve control (YCC) policy unchanged, allowing 10-year Japanese government bond yields to move within a ±0.5% band around zero. The decision disappointed yen bulls who had hoped for a further policy adjustment following January’s surprise tweak.
USD/JPY climbed as high as 150.78 before profit-taking and intervention concerns trimmed gains. The pair settled at 150.34 at the New York close.
Intervention Risk
Japanese Finance Minister Shunichi Suzuki reiterated the government’s concern about “one-sided, rapid” moves in the yen, keeping markets on edge about potential intervention. Japan spent approximately 9 trillion yen ($60 billion) defending the currency in 2022 when USD/JPY crossed 152.
“The 150 level is psychologically significant. Every trader knows Japan intervened here before, so positioning gets very careful above this level.” — Head of FX at major Tokyo bank
With the interest rate differential between the US and Japan remaining wide, fundamental pressure on the yen persists. However, the intervention risk cap means gains above 152 could prove difficult to sustain.