No Bank of Japan worries as USD/JPY stretches to the highs of the day

USD/JPY is at the highest levels of the day and testing the top of the recent range. The pair is up 85 pips to 156.34.

The high last week was 156.58 and that will be in focus through the Bank of Japan decision, which is coming up in Tokyo trade. The market is 88% priced for a rate hike to +0.50% and all indications suggest that will come.

Less clear is what comes next. The market is almost fully priced for another hike before year end but the timeline of that is highly uncertain. I wouldn’t expect strong guidance from the BOJ later but any hints will be market movers.

On the USD side, Treasury yields have turned higher today and that’s likely driving the upside. US 10-year yields are trading at 4.60% after trading at a low of 4.56% earlier.

A break of the weekly high would face some resistance at 157.00 and the mid-January lows (now resistance) but there are mostly open skies to 158.00.

This article was written by Adam Button at www.forexlive.com.