USD/JPY Under Pressure as BOJ Hikes to 1%, Signals Taper Pause

USD/JPY faces bearish pressure following the Bank of Japan's widely expected 25 basis point rate hike, bringing its policy rate to 1.0% — the highest level in decades. The BOJ simultaneously announced a pause in its bond tapering program effective April 2027, while flagging ongoing inflation overshoot risks, signaling a more hawkish stance that could support further yen strength. In broader Asia-Pacific developments, mixed Chinese data weighed on risk sentiment: industrial output beat expectations at +4.5% y/y, but retail sales posted their first decline since 2022, while house prices fell -3.5% y/y. On the commodities front, Goldman Sachs cut its Brent crude forecast to $80 for 2026 and $75 for 2027 amid a potential Hormuz deal, with oil prices tracking toward the $60s — a development that could weigh on commodity-linked currencies like AUD and CAD. Traders should monitor the BOJ vote split details and any July forward guidance signals, as these could determine whether USD/JPY breaks through near-term support levels. The divergence between a tightening BOJ and other major central banks remains a key theme for yen crosses.