Yen Recovers Slightly After BoJ Interest Rate Decision

(RTTNews) - The Japanese yen recovered slightly from recent lows against other major currencies in the Asian session on Tuesday, after the Bank of Japan decided to maintain its interest rate and to reduce the pace of the amount of bond purchases from April next year.

The policy board of the BoJ unanimously decided to hold the uncollateralized overnight call rate to remain at around 0.5 percent. The decision came in line with expectations.

Previously, the bank had raised the benchmark rate to the current level from 0.25 percent in January.

By an 8-1 majority vote, the board also decided to cut the amount of its monthly outright purchases of JGBs so that it will be about JPY 2 trillion in January-March 2027.

The amount will be cut by around JPY 400 billion each calendar year until January-March 2026, and by about JPY 200 billion each calendar quarter from April-June 2026.

Traders remain cautious and optimistic the conflict between Israel and Iran will remain relatively contained. Tariff uncertainty is also keeping the market on its toes and weighing on market sentiment.

Iran has been urgently signaling that it seeks an end to hostilities and resumption of talks over its nuclear programs. Iran is reaching out to US and Israel through intermediaries indicating its preparedness to end the hostility.

In the Asian trading today, the yen rose to 167.02 against the euro, from a recent 1-year low of 167.60. On the upside, 164.00 is seen as the next resistance level for the yen.

Against the pound and the U.S. dollar, the yen advanced to 196.06 and 144.40 from a 6-month low of 196.85 and a 6-day low of 145.11, respectively. If the yen extends its uptrend, it is likely to find resistance around 192.00 against the pound and 142.00 against the greenback

The yen edged up to 177.62 against the Swiss franc, from a recent low of 178.15. The next resistance level for the yen is seen around the 174.00 region.

Looking ahead, Germany ZEW economic sentiment index for June is due to be released at 5:00 am ET in the European session.

In the New York session, U.S. retail sales for May, export and import prices for May, industrial and manufacturing productions for May, business inventories for April and U.S. NAHB housing market index for June are slated for release.