USDJPY
OUTLOOK - Bank of Japan’s decision on Friday will steal the limelight.
- BoJ is expected to stand pat on monetary policy, but could subtly signal that a change in strategy in looming on the horizon.
- This article looks at key USD/JPY levels to watch in the coming days
The Bank of Japan will announce its decision in September following the Federal Reserve's decision. It is expected to maintain its monetary policy, keeping the interest rate stable and continuing the yield curve control program. The bank may gradually move away from its accommodative stance to prevent market disruptions and minimize surprises.
Governor Ueda hints at a possible decision on raising borrowing costs based on consumer price data. Policymakers are considering getting rid of negative interest rates due to inflation surpassing the 2% target, causing Yen depreciation and oil price increases. The central bank is becoming less accommodating, signaling a shift from the current stance.
The central bank's slight shift in message suggests they are considering less accommodative policies, potentially leading to yen appreciation and a short-term price increase against the US dollar. However, any retracement in USDJPY may only be temporary due to high US bond yields, which will continue to support the strength of the greenback in the foreign exchange market.
USDJPY
TECHNICAL ANALYSIS USD/JPY dropped to 146.00 last week but bounced back towards 148.00. However, it has struggled to break above this level, leading to a recent decline to 147.50. If the downward trend continues, support is expected at 145.90 and 144.55, with a potential target of 143.85. On the other hand, if buyers regain control, resistance is found at 148.00, and a break above could push the pair towards 148.80 and 150.00.
