USD/JPY soars to near 154.00 as Japanese Yen plunges after BoJ’s policy announcement

The USD/JPY pair trades 0.8% higher to near 154.00 during the European trading session on Thursday. The pair strengthens as the Japanese Yen (JPY) underperforms across the board following the Bank of Japan (BoJ) monetary policy announcement earlier in the day.

In the policy announcement, the BoJ held interest rates steady at 0.5%, as expected, and reiterated its commitment to raise interest rates further. “Will continue to raise policy rate if economy, prices move in line with forecast, in accordance with improvements in economy, prices,” BoJ Governor Kazuo Ueda said in the press conference.

BoJ’s Ueda stated the need to continue observing a little longer how the US tariff impact would affect the Japanese economy.

The major reason behind weakness in the Japanese currency was that only two BoJ members: Naoki Tamura and Hajime Takata supported an interest rate hike.

Meanwhile, the US Dollar (USD) has clawed back its early losses and turns positive after the meeting between United States (US) President Donald Trump and Chinese leader Xi Jinping. Trump stated that the meeting with Xi was “fantastic” and reduced tariffs on imports from Beijing to 47% from 57%. He added that Beijing will allow export of rare earths to Washington “openly and freely”.

At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 99.30.

Comments from US President Trump signaling an improvement in US-China trade relations are favorable for the US Dollar.