The Bank of Japan may not move this week, but July is coming into focus
A Bank of Japan rate decision is expected on 28 April. No change is widely anticipated at this week's meeting, but markets are increasingly pricing in the possibility of a rate hike around July. With oil prices rising again and inflation pressures building, investors will be listening closely for any signal about when the Bank of Japan may be ready to act next.
A dovish tone could put renewed pressure on the yen
If the BoJ strikes a dovish tone, that would likely be negative for the yen and could push USD/JPY higher out of its recent consolidation range. The pair could then begin moving back towards the highs seen in the summer of 2024, when it traded near 162. The 160 level remains especially sensitive because Japanese officials have previously signalled discomfort there and the threat of intervention is still a live consideration for the market.
The chart points to a possible bullish breakout
A dovish BoJ meeting and press conference may give traders a reason to test those upper levels. From a technical perspective, the chart suggests a potential bull flag has formed, which would support the case for another leg higher from the current region around 159. If that interpretation is correct, the next meaningful target may be the 162 area.
