Will USD/JPY Continue Lower After Ueda’s Comments on Policy Change?
USD/JPY was under pressure last week, after surging 250 pips higher to 145 on Monday after the BOJ meeting. However, the decline came from the USD, as it continued to fall, following the price action we’ve seen for the majority of the week because the Bank of Japan disappointed JPY buyers last Monday by leaving the policy unchanged.
On the daily chart, the pair moved above the 200 SMA (purple) early last week, but reversed down and USD/JPY closed below this moving average. This indicator seems to be a barometer on the daily chart that will determine whether the bias is downward or upward in the future. Although the market action has witnessed moves above and below the level over the last week. But considering the recent USD weakness after the softer core PCE price index last week, the bias is to the downside now. On the downside, the swing zone between 141 – 141.50 is the next obstacle to overcome. Below that, sellers will begin to consider the 50% midpoint at 139.60.
USD/JPY Daily Chart – The Price Remains Below the 200 SMA
Earlier today the Bank of Japan Core CPI inflation index remained unchanged at 2.5% as expected, although yesterday we had some remarks from the Bank of Japan governor Ueda which mentioned the policy change again. Although, the price action was very slow on the JPY pairs, since most markets were closed for Christmas Day.
Remarks by BOJ Governor, Kazuo Ueda
- Response to Positive Wage-Inflation Cycle:
- The BOJ will consider changing policy if the positive wage-inflation cycle strengthens. This indicates that the central bank is attentive to the dynamics of wages and inflation in the economy.
- Timing of Policy Change:
- Governor Ueda emphasizes that the timing of future policy changes cannot be pre-set. This suggests a data-dependent and flexible approach to policy adjustments.
- Appropriate Decision-Making:
- The central bank aims to make appropriate decisions while scrutinizing economic developments. This underscores the importance of a careful assessment of various economic indicators and trends before making policy changes.
- Nominal Rates in a Sustained Positive Inflation Environment:
- In an economy where positive inflation is sustained, nominal interest rates are expected to be high. This aligns with the economic theory that higher inflation may lead to higher nominal interest rates.
- Patient Maintenance of Monetary Easing:
- Governor Ueda states that the BOJ will patiently maintain monetary easing to ensure that conditions are right for the positive inflation cycle to be sustained. This reflects a commitment to providing accommodative monetary conditions to support economic objectives.
USD/JPY Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals