08:42 AM EDT, 04/26/2024 (MT Newswires) -- Investors are now more enthusiastic about buying USD/JPY after sitting out its rally for much of the last two years, according to BofA Global Research strategists, even if this means going toe-to-toe with Japan's Ministry of Finance.

"Most investors missed the amazing USD/JPY rally of the last two years, because they never liked the level as it kept rising," BofA strategists told clients on Friday.

"They will buy after an intervention dip, and they will keep testing and pushing the level upward as long as the MoF is not intervening," the strategists wrote in a note.

BofA said this creates an "impossible situation" for the Bank of Japan, but one that is entirely consistent with the relative stance of monetary policies in Tokyo and Washington.

Overnight volatility suggests this battle of wills might already have been playing out in the market on Friday when another rally in USD/JPY was interrupted twice by unusually large albeit momentary sell-offs.

USD/JPY leapt above the psychologically important 156 level after the BoJ left its interest rate unchanged at 0.1% and maintained its earlier forward guidance suggesting it will continue to maintain an accommodative stance going forward.

The pair traded as high as 156.82 before being beaten back to 154.95 in a matter of minutes shortly after the London open with similar but smaller moves around the European mid-day. Both instances are clearly visible on intraday charts.

"If the aforementioned outlook for economic activity and prices will be realized and underlying inflation will increase, the Bank will adjust the degree of monetary accommodation, while it anticipates that accommodative financial conditions will be maintained for the time being," BoJ said in its latest outlook report.