USDJPY Hit Our 162 Target — Now 164 Breakout Coming?

Currency strength depends on multiple interconnected factors beyond interest rate differentials; in the case of USD/JPY, despite the Bank of Japan's 25 basis point rate hike (highest in 31 years), the yen continued weakening because the central bank simultaneously announced continued bond purchases of 2 trillion yen from April 2027, which pumped liquidity into the economy and offset the tightening effect, while the carry trade continued due to the persistent 2% interest rate differential between US and Japan.