FxWirePro: USD/JPY rises as yen weakens following BOJ's 25bp rate hike

• USD/JPY rose higher on Friday as yen weakened after Bank of Japan lifts rates to 31-year high.

• The Bank of Japan raised borrowing costs to their highest level in three decades on Friday and indicated further rate increases could follow as policymakers respond to persistent inflation linked to elevated oil prices.

•The yen declined even after the widely expected rate hike, with investors highlighting the absence of firm hawkish guidance and two dovish dissenters who favoured a more cautious approach to raising borrowing costs..

• The BOJ lifted its policy rate to 1.25% from 1% at the conclusion of its two-day meeting on Friday, with the decision passing by a 7-2 vote. Board members Toichiro Asada and Ayano Sato voted against the move.

•The hike comes after rate increases by European and U.S. peers, highlighting the growing challenge for central banks from global inflation risks fueled by the Iran war-driven spike in energy prices, fiscal expansion and accelerating demand for AI investment.

• Immediate resistance is located at 157.42 (Higher BB), any close above will push the pair towards 158.50(38.2%fib).

•  Support is seen at 156.90(50%fib) and break below could take the pair towards 155.78(SMA 20)

Recommendation: Good to buy   around 157.30, with stop loss of 156.50 and target price of 158.00