USD/JPY Resumes Uptrend on Rumours that BOJ Keeps Policy Unchanged

USD/JPY has been bullish for quite some time, although the Japanese Yen displayed strength last week, as this pair dived more than 7.5 cents lower. But, the 200 SMA (purple) which has been acting as support and resistance before and it turned into support last week, holding the retreat above 137. The stochastic indicator was overnought on this pair so that was the right time to go long on USD/JPY.

The price has been moving higher in this pair as the JPY continues to weaken due to reports that the Bank of Japan (BOJ) is not planning to make any adjustments to its yield curve control settings in the upcoming week. The rumours this week suggested that several policymakers at the BOJ believe there is currently no urgent need to implement new measures on this front as inflation has been cooling off all over the world. Furthermore, there appears to be no consensus on when the BOJ might begin to phase out stimulus measures.

While the central bank is expected to raise its inflation forecasts for this year, the projections for fiscal years 2024 and 2025 are anticipated to remain largely unchanged. The BOJ’s approach seems to be cautious, as they prefer to wait for more data before considering any potential policy changes.

Asa result, the JPY experienced further decline against the USD and other currencies in the foreign exchange market. The situation is being closely monitored by investors and analysts to gauge the possible impacts on the country’s economy and financial markets.

The recent headlines have disappointing for the JPY buyers once again, as they had been hopeful for a potential policy adjustment by the Bank of Japan (BOJ) in next week’s meeting. However, the BOJ’s stance suggests that they are unlikely to make any changes, leading to a drop in 10-year Japanese Government Bond (JGB) yields from 0.478% to 0.435% at the start of the day.

The impact of higher Japanese yields is now becoming evident with only a week remaining before the BOJ meeting. Market participants are starting to lose hope that the BOJ will take any significant actions, which has been causing a shift in market sentiment. The price approached 142 this week and we expect this level to be broken next week, as trading gets underway, so we haveturned bullish on JPY pairs such as USD/JPY and EUR/JPY .

USD/JPY Live Chart