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DBS Group Research's Philip Wee has issued a cautionary note on USD/JPY, highlighting the pair's proximity to the 159-160 resistance zone following Operation Epic Fury. He anticipates the Bank of Japan (BOJ) will adopt a hawkish stance during its March 19 meeting, differentiating between temporary supply-driven inflation and demand-pull pressures. This analysis suggests the BOJ may maintain tighter monetary policy despite global easing trends, creating volatility in the yen cross. For traders, the BOJ's potential shift toward hawkishness could disrupt USD/JPY's technical trajectory. A breakout above 160 would signal renewed bullish momentum, while a failure to hold this level might trigger a pullback. The central bank's ability to balance inflation control with economic growth will be critical for yen positioning in the coming months. The implications extend beyond Japan's borders, as a sustained hawkish BOJ could pressure other central banks to delay rate cuts. Gulf investors with exposure to USD/JPY through hedging or carry trades should monitor the March 19 policy decision closely. The key focus will be on whether the BOJ signals a multi-year shift away from ultra-loose monetary policy.
