USD/JPY: BOJ to hike rates by less than 50bps by December 2025 – BBH

FXStreet Insights Team FXStreet

USD/JPY is up near a multi-week high just under 151.00 with the next big resistance offered at the 200-day moving average at 151.75, BBH's FX analysts report.

Bar for an aggressive tightening cycle is high

"The Bank of Japan (BOJ) published the minutes of the January 24 meeting. At that meeting, the BOJ raised the policy rate 25bps to 0.50%, in line with consensus, and reiterated it would continue to raise the policy interest rate if the outlook for economic activity and prices will be realized. Only Nakamura Toyoaki dissented on raising rates, which was not surprising as he also voted against raising rates last July."

"A key takeaway from the minutes is that the bar for an aggressive tightening cycle is high. One member pointed out that 'it would be necessary for the Bank to carefully adjust its monetary policy while examining the impact of the policy interest rate hike on economic activity and prices at the time of each rate hike.'"

"The swaps market continues to imply less than 50bps of rate BOJ hikes by December 2025 and terminal rate of 1.00% to 1.25% over the next two years."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD flirts with weekly lows near 1.1770

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to challenge the area of weekly throughs near 1.1770 on Thursday. The pair’s decline comes in response to marked gains in the US Dollar amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.