Why the market does not believe the Bank of Japan

Bank of Japan Messaging
Last week, the Bank of Japan elected to hold interest rates steady. They also surprised by announcing a tweak to monetary policy that could allow more interest rate flexibility in the future. Instead of raising short term interest rates, the BoJ made a more intricate adjustment - raising the ceiling on 10 year interest rates by 0.5%. Markets initially reacted in favor of the yen, before turning against JPY pairs over the weekend and into this week.
Effect on USD/JPY
The recent interest rate decisions for both countries helped conclude a turbulent July for the dollar-yen pair. Surging into August, USD/JPY finishes July close to where it started the month - near 144.00. Throughout the month, the pair fell over 700 pips and now trades above 143.00. Such price extremes allow traders to either join the rally through new highs or take a contrarian stance towards mean reversion.
USD/JPY historical prices

How to trade Japanese yen
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on JPY pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
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