Published: 22 December 2025,00:57
Daily Market Analysis New
Key Takeaways:
*BoJ raises benchmark interest rate to 0.75%, the highest in 30 years.
*Yen continues to struggle amid lack of clear forward guidance on further tightening.
*The market weighs fiscal uncertainties and external risks, keeping currency swings elevated.
Market Summary:
The Japanese yen faced continued volatility last week despite the Bank of Japan’s historic rate hike to 0.75%, its highest level in three decades. Governor Kazuo Ueda’s policy board unanimously raised the benchmark rate by 25 basis points, citing solid wage growth and favorable economic conditions. Economists widely anticipated the move, which contributed to muted initial support for the currency.
Investors expressed caution due to the BoJ’s lack of clear guidance on future tightening, with Ueda emphasizing that additional rate increases would depend on economic and price developments. As a result, the yen struggled to capitalize on the rate hike, with market sentiment weighed down by uncertainties surrounding Japan’s fiscal policy and broader economic trajectory.
The yen’s weakness has also been exacerbated by geopolitical tensions and the ongoing impact of U.S. monetary policy. Treasury yields in Japan have risen, but the gains have not translated into significant yen appreciation, highlighting the complex interplay between domestic policy and external pressures. Analysts caution that while the BoJ’s hawkish pivot is significant, the currency may continue to experience bouts of volatility until more definitive signals emerge regarding the pace and scope of further monetary tightening.
Technical Analysis
USD/JPY, H4:
USD/JPY extended its gains following a breakout above the Fibonacci 23.6% extension at 156.50, currently testing the 38.2% extension near 157.65. Momentum indicators show mixed signals: while the pair remains in an uptrend, MACD momentum is slowing, and RSI has risen to 75, entering overbought territory. This suggests that while a breakout above 157.65 could push the pair toward 158.55, traders should watch for a potential retracement.
If the pair fails to sustain its advance, support levels lie at 155.50 and 154.65, where technical buyers may step in.
Resistance Levels: 157.65, 158.55
Support Levels: 155.50, 154.65
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