The U.S. dollar continued its rally in today's trading or in April 28th, while its main rival currencies were hit by various problems. USD/JPY soared more than 1 percent to 130.66.

That pair posted a high record since 2002. The cause was Japan's central bank or so called BOJ, maintained it’s ultra-loose monetary policy. Meanwhile, EUR/USD briefly touched 1.0481.

That was the lowest level since March 2017. This level reached after Russia halted their gas supplies to Poland and Bulgaria. The statements of Japanese government officials some time ago made market participants hope that the BoJ would change its policy direction. 

However, that hope was dashed after the announcement of the results of the BoJ meeting this morning. This is quite surprising and also disappointing for many traders.

BOJ let’s Yen to Weaken 

The Bank of Japan raised Japan's inflation forecast going forward. However, they said that they would continue to maintain its -0.10 percent interest rate, bond-buying program, and yield curve control (YCC) policy. 

In fact, the series of policies resulted in a significant weakening of the yen in the market nowadays. The BoJ's stance puts it in a different position with the United States Federal Reserve. 

That making it the most dovish institution among major central banks. Market participants are now expecting for the Fed to raise it’s interest rates by 50 basis points at the FOMC meetings in May, June, and July 2022.

That may bringing the Fed's interest rate to 3.0% by the end of the year. Consequently, The USD/JPY pair skyrocketed after the BoJ's announcement some times ago. 

The Zero Interest Rate May be Maintained 

After weeks of confusing comments about the yen from government officials, the BoJ declared rapidly unequivocally that the surge in global inflation was outside Japan.

That is why; there is a possibility that zero interest rates would be maintained. This opinion was stated by Sean Callow As a senior strategist At Westpac in a moment some days ago. 

USD/JPY position at 130 may be a round number, but it's not the top red line. It is because the attention of the forex market is likely to quickly shift to 135 which is the high record of 2022.

In addition, The yen is not ignored by the Bank of Japan, but the weakening yen currency is largely a side effect in the eyes of the BoJ. However, that position may change in the future. 

Is it the Beginning of an Energy War? 

The United states dollar exchange rate is also getting stronger because of the escalation of the crisis on the European continent. The Russo-Ukrainian war is now in danger because of a reason. 

This situation may start an energy war because Russia halts their gas supplies to Poland and Bulgaria. Moscow has accused the two countries of not paying for their gas purchases in rubles as per their demands.

Poland and Bulgaria said that they have anticipated this kind of situation. That is why; it will not make any sudden energy crisis to their countries. However, market participants are panicking. 

Russia still Stay in their Decision

It is because Russia said that they are ready to stop the energy stocks to some countries which refuse to pay in Rubel. In the other side, European Union remind their members that paying in Rubel is violating the sanctions. 

This seems to be the first real step of the energy war As it was stated by an analyst. The question now is whether the cuts will extend to other major importers in a situation.

It Is especially the one which could quickly become a test of European assertiveness to support Ukraine amid surging energy prices and an increased risk of recession."