USD/JPY In Limbo Ahead Of BoJ Announcements

Posted Thursday, June 14, 2018 by
Shain Vernier • 2 min read

The USD has posted a nice session against the forex majors. It appears as though traders are beginning to price in the aggressive tone of yesterday’s FOMC meeting. With two more rate hikes on deck for 2018, Greenback bulls are flexing on this Thursday session.

The Bank of Japan (BoJ) Is Ready To Take The Stage

The Bank of Japan (BoJ) is due out with their Interest Rate Decision during the upcoming U.S. overnight. Rates are expected to be held static at -0.1%, in line with previous decisions.

Concerns are beginning to surface facing the policy of Abenomics and a devalued yen. With the U.S. FED raising rates and the ECB announcing plans to cut its bond-buying program, the BoJ is set to deliver statements that are in stark contrast. To put it mildly, the disparity in policies is widening.

Lagging inflation in Japan is the culprit behind the decision, as is the BoJ’s desire to promote the export sector. These factors have influenced policy for quite some time — industry experts are beginning to wonder if they will ever end.

USD/JPY Technicals

The USD/JPY is choppy and non-committal on the daily time frame ahead of the coming BoJ Interest Rate Decision. After failing at a key topside resistance level yesterday, price appears ready to retest the 110.67 area.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Here are the two support and resistance levels to watch for the rest of the week:

  • Resistance(1): 78% Retracement Current Wave, 110.67
  • Support(1): Bollinger MP, 109.86

Overview: Most of the analysts looking at the USD/JPY are calling for the yen to lose marketshare amid a bullish breakout. Given the current market fundamentals, this point is very hard to argue.

A daily double-top formation setting up near 111.39 is possible by Friday’s close. In the event that it does, a short position in the USD/JPY may be in the offing for early next week.

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