Last week, USDJPY retraced the decline following the Fed interest rate decision as the Bank of Japan (BoJ) retains the Quantitative and Qualitative Easing (QQE) program with Yield-Curve Control (YCC), and developments coming out of the US may influence the exchange rate over the coming days as Chairman Jerome Powell is scheduled to testify in front of Congress.
USD/JPY is on the cusp of testing the yearly high (135.59) as the BoJ emphasizes that the central bank “will not hesitate to take additional easing measures, if necessary,” and it seems as though Governor Haruhiko Kuroda and Co. will continue to use their non-standard devices in 2022 as officials expect “short- and long-term policy interest rates to remain at their present or lower levels.”
The Fed testimony may boost up USDJPY as the BoJ remains hesitant to shift gears, and expectations for higher US interest rates may fuel the rebound from the monthly low (131.50) as the FOMC steps up its effort to fight inflation.
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