Yen Tumbles to Multi-Month Lows After BOJ Ends Negative Rates

The Bank of Japan's decision to end its negative interest rate policy has weakened the yen against major currencies. The yen fell to a four-month low against the U.S. dollar and a 16-year low against the euro. The Bank of Japan's decision to maintain accommodative conditions has kept pressure on the yen, as U.S.-Japanese rate differentials remain significant.

The yen's weakness is expected to continue, as the carry trade remains in play. This means that investors are borrowing in low-interest-rate currencies, such as the yen, and investing in higher-interest-rate currencies, such as the U.S. dollar. This trend is likely to continue as long as other central banks delay cutting rates.

The main focus for the day remains on the Federal Reserve's decision. Although the central bank is not expected to move, its economic projections and comments from Chair Jerome Powell will be closely watched. Last week's stronger-than-expected inflation reports have led traders to reduce their bets on rate cuts this year. Traders are now pricing in a 59% chance of the Fed starting its easing cycle in June.