USD/JPY set to post biggest daily gain in a month, eyes on December highs

USD/JPY Posts Significant Surge

The Japanese yen is experiencing a decline today, driven by the BOJ's recent decision to hike interest rates by 25 basis points to 0.75%, the highest since 1995. After some early-week drops, USD/JPY has staged a robust rebound, buoyed by a double-bottom off early December lows just below 155.00.

Resistance at 156.90-95

The movements in the pair are significantly influenced by the BOJ. Although rates have increased, market reactions seem to reflect a 'buy the rumor, sell the fact' mentality. Governor Ueda did not clearly signal further hikes in March but left the door ajar for discussions. The threshold for future rate increases appears to require compelling evidence from the upcoming spring wage negotiations.

Caution on Market Movements

As USD/JPY approaches resistance at the December highs of 156.90-95, a break above could pave the way for further gains toward November's high of 157.89. However, given the proximity to holiday periods, taking this significant jump lightly could be risky. Thin liquidity may amplify volatility, and traders should remain cautious in interpreting subsequent market movements.