Japanese yen falls almost 1% on fresh monetary policy uncertainty

USDJPY jumped 0.9% on Tuesday after Japan PM Takaichi raised concerns about BoJ’s further interest rate hikes that collides with wide market expectations for increase in borrowing cost by 1% in the first six months of 2026 and the first action expected as early as April.

Fresh uncertainty about anticipated monetary policy trajectory deflated yen, which fell to the lowest in two weeks against the US dollar on Tuesday.

Tuesday’s rally generated signal of bullish continuation after rally from 152.26 Feb 12 low) paused for two-day shallow pullback, extension above Fibo 61.8% of 157.65/152.26 bear-leg (155.60) and cracking the base of daily Ichimoku cloud (156.13) adding bullish signals.

Bulls slowed after testing cloud base (seen by traders as good take-profit level after today’s significant rally), with overbought stochastic and north-heading 14-d momentum still holding under the centreline, setting stage for a pause.

Firmer technical picture and supportive fundamentals suggest that bulls may take a breather for consolidation and positioning for fresh attack at daily cloud (which is quite thick and may provide further headwinds), with stronger penetration into cloud to fuel hopes of full retracement of 157.65/152.26 fall.

Broken Fibo 61.8% (155.60) offers immediate support ahead of more significant 154.95 level (100DMA / broken Fibo 50%).

Res: 156.13; 156.38; 157.00; 127.40
Sup: 155.60; 154.95; 154.73; 154.32