USD/JPY drops 0.5% as BOJ's Tamura signals decisive rate hike ahead
USD/JPY fell sharply by 0.5% (75 pips) to 157.25 during Asian trading following hawkish comments from Bank of Japan board member Tamura, who warned that a 'decisive rate hike may be needed' to combat inflation pressures. The yen strengthened across the board as markets rapidly repriced BOJ rate expectations, with swap markets now indicating a 65% probability of a 25-basis-point hike at the July meeting, up from 40% previously. Japanese government bond yields surged, with the 10-year yield climbing 8 basis points to 1.05%. Technical indicators show USD/JPY breaking below the key 158.00 support level, with next major support at 156.50 (50-day moving average). The hawkish shift marks a significant departure from the BOJ's ultra-accommodative stance, potentially ending decades of negative rates. Traders should monitor upcoming Japanese inflation data for further policy clues.
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