BoJ rate hike odds rise as the central bank is said to focus more on the weakening yen

Rising Odds of BoJ Rate Hikes

According to a Bloomberg report, Bank of Japan officials are paying increased attention to the weakening yen and its inflationary implications. This shift could impact future rate hike probabilities, although rates are expected to remain steady at next week's meeting. Odds for a hike in March have jumped to 22%, boosting speculation for an earlier hike and potentially strengthening the yen in the short term.

Yen Weakness and Market Response

The yen strengthened across the board yesterday following numerous verbal interventions from Japanese officials, particularly as prices approached the key 160.00 mark, where past interventions occurred. On the 1-hour chart, USDJPY fell in reaction to these statements, showing signs of continued buying pressure targeting new highs.

Technical Analysis and Future Movements

Currently, a minor counter-trendline is defining the consolidation. Buyers are likely to lean on this for support to push into new highs, while sellers anticipate a break lower that could lead to bearish bets towards the major trendline around the 157.50 level. This hints at potential short-term yen strength amidst heightened market speculation.