USD/JPY faces important resistance at the 200-MA around 152.00 - BBH

The Bank of Japan (BOJ) delivered a cautious hold and warns against a weaker Japanese Yen (JPY), BBH's FX analysts report.

BOJ signals little tolerance for a weaker currency

"USD/JPY rallied briefly above 150.00 before paring back gains to 149.20. As was widely expected, the BOJ left the policy rate unchanged at 0.50%. The decision was unanimous. BOJ Governor Ueda reiterated the bank's guidance that it would continue to raise the policy interest rate if the outlook for economic activity and prices will be realized, adding real interest rate is very low."

"However, the BOJ cautioned 'there remain high uncertainties surrounding Japan's economic activity and prices, including the evolving situation regarding trade...' The comments reinforce market pricing for a BOJ terminal rate of 1.00% to 1.25% over the next two years with the next full 25bps hike in September."

"The limited room for a further upward adjustment to BOJ rate expectations curtails JPY upside. Meanwhile, JPY downside is contained as the BOJ signaled little tolerance for a weaker currency. 'With firms' behavior shifting more toward raising wages and prices recently, exchange rate developments are, compared to the past, more likely to affect prices.' USD/JPY faces important resistance at the 200-day moving average around 152.00."