The dollar-yen broke above the 115 level for the first time in seven years on Thursday. Active U.S. dollar buying pushed the pair as high as 115.40 in the Asian trading session, according to market participants.
The Bank of Japan’s (BoJ) second round of monetary easing, announced last Friday, has ignited a powerful rally in dollar-yen, which is up over 9 percent year to date.
Despite the rapid rise, analysts believe the rally is far from over. “The fact that the easing move on Friday was a surprise provides the market with some scope to ‘chase’ as USD/JPY rises to reflect the policy surprise, and any pull-back is likely to be shallow as market participants use the opportunity to ‘buy the dip’,” Fiona Lake strategist at Goldman Sachs wrote in a note late Wednesday.