Japan raises rates to highest level since 1995 — bet on the yen bouncing back
Thesis
Higher interest rates in Japan make Japanese bonds and savings accounts more attractive, which usually pushes the value of the Japanese yen higher against the US dollar. A stronger yen means Japanese exports become more expensive for foreign buyers, but it also signals economic confidence. You can bet on the currency itself strengthening, or invest in Japanese companies that do well when the yen rises—like domestic banks that make more profit on loans. This is a momentum trade based on the central bank aggressively changing its policies.
Strategy approach
Build a trend-following strategy on the daily timeframe. Enter long FXY (or long JPY against USD in forex) when the price breaks above the upper Bollinger Band (20, 2) on high volume. Alternatively, screen for Japanese financial stocks (e.g., NMR, or Japan-focused bank ETFs) breaking above their 50-day moving average. Exit if FXY closes below the 20-day moving average.