USD/JPY Reacts to BoJ's Continuation of Negative Rates
BoJ's Persistent Ultra-Loose Policy
As anticipated, the Bank of Japan upheld its loose monetary policy, waiting for signs of potential wage increases to stabilise inflation around 2%. This decision dashed hopes for an immediate end of negative interest rates, maintaining the dovish policy stance.
Governor Kazuo Ueda acknowledged positive trends in prices and wages but stressed ongoing uncertainties. He remained cautious, emphasising the need to monitor whether a positive cycle of wage-driven inflation will materialise.
During the meeting, the BOJ retained the short-term rate at -0.1% and the 10-year government bond yield target at approximately 0%. They maintained the upper limit of 1.0% for the 10-year yield.
USD/JPY Sees Uptick from Technical Levels
USD/JPY has rallied on the back of today’s BoJ meeting – indicating that a short-term bottom may be in place.
On the daily candle chart (below), we can see that prices have rallied from a cluster of key technical levels: the 61.8% Fibonacci retracement level from the July swing lows to October highs, the 50% Fibonacci retracement from the March swing lows, and the volume-weighted average price (VWAP) anchored to the March swing lows.
USD/JPY Daily Candle Chart
Past performance is not a reliable indicator of future results
Lower Timeframe Analysis
Dropping down a timeframe to the four-hour candle chart highlights that despite the recent rally, USD/JPY remains locked in a downtrend for now.
Bullish Scenario: USD/JPY bulls would likely be best served waiting for prices to break and hold above the descending trendline (blue dotted line on chart below) – with a view to buying the first pullback.
Bearish Scenario: While USD/JPY bears could look to short reversal patterns that form near the descending trendline.
USD/JPY 4-Hour Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
As anticipated, the Bank of Japan upheld its loose monetary policy, waiting for signs of potential wage increases to stabilise inflation around 2%. This decision dashed hopes for an immediate end of negative interest rates, maintaining the dovish policy stance.
Governor Kazuo Ueda acknowledged positive trends in prices and wages but stressed ongoing uncertainties. He remained cautious, emphasising the need to monitor whether a positive cycle of wage-driven inflation will materialise.
During the meeting, the BOJ retained the short-term rate at -0.1% and the 10-year government bond yield target at approximately 0%. They maintained the upper limit of 1.0% for the 10-year yield.
USD/JPY Sees Uptick from Technical Levels
USD/JPY has rallied on the back of today’s BoJ meeting – indicating that a short-term bottom may be in place.
On the daily candle chart (below), we can see that prices have rallied from a cluster of key technical levels: the 61.8% Fibonacci retracement level from the July swing lows to October highs, the 50% Fibonacci retracement from the March swing lows, and the volume-weighted average price (VWAP) anchored to the March swing lows.
USD/JPY Daily Candle Chart
Past performance is not a reliable indicator of future results
Lower Timeframe Analysis
Dropping down a timeframe to the four-hour candle chart highlights that despite the recent rally, USD/JPY remains locked in a downtrend for now.
Bullish Scenario: USD/JPY bulls would likely be best served waiting for prices to break and hold above the descending trendline (blue dotted line on chart below) – with a view to buying the first pullback.
Bearish Scenario: While USD/JPY bears could look to short reversal patterns that form near the descending trendline.
USD/JPY 4-Hour Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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