USD/JPY Nears Key Shift: BoJ and Fed Decisions Set to Influence Path

The USD/JPY pair experienced a modest uptick of 0.07% on March 18, reaching 149.10. This movement comes ahead of a pivotal Bank of Japan (BoJ) policy meeting on Tuesday, which might result in the Japanese Bank Rate moving out of negative territory for the first time in over eight years.

This shift is anticipated following a significant wage increase agreement by Japan’s largest trade union, a move encouraged by the BoJ to sustain domestic inflation targets and stimulate economic growth.

Anticipation Builds for BoJ and Fed Decisions

Financial markets are assigning a 44% likelihood of a 10 basis point rate hike in the upcoming session, with expectations rising to 62% for the April meeting. The BoJ’s decision might coincide with the release of the Quarterly Economic Outlook, potentially delaying interest rate adjustments until then.

This would mark the first rate increase in 17 years, alongside speculations about an end to yield curve control measures, hinting at a pivotal shift in Japan’s monetary policy.

US Dollar Influence on USD/JPY Dynamics

The trajectory of the USD/JPY is largely influenced by the strength of the US dollar, which has gained momentum following unexpectedly high CPI and PPI figures. These data points have cast doubt on the anticipated rate cuts at the June FOMC meeting.

With the Federal Reserve set to announce its policy decision on Wednesday, all eyes will be on Chair Jerome Powell’s commentary for further cues on the direction of the US dollar and, by extension, the USD/JPY price forecast.

In summary, the USD/JPY price forecast hinges on critical policy decisions from both the BoJ and the Fed, with market participants closely monitoring shifts in monetary policy and economic indicators to gauge the pair’s future trajectory.

USD/JPY Price Forecast: Technical Outlook

On March 18, the USD/JPY pair edged up slightly by 0.07%, marking the price at 149.10. This subtle increase reflects the pair’s ongoing struggle with key technical levels amid fluctuating market sentiments.

The pivot point for the day is set at 149.109, with the currency facing immediate resistance at 149.723, and further barriers at 150.109 and 150.554. On the downside, support is seen at 148.643, followed by 148.207 and 147.643, delineating potential fallback points.

The Relative Strength Index (RSI) of 66 suggests the pair is nearing the overbought territory, hinting at possible resistance to maintain its bullish momentum above the 61.8% Fibonacci level of 149.108.

Despite this, the 50-day Exponential Moving Average (EMA) at 148.39 supports an overall bullish outlook. However, a descent below the pivot could trigger a significant selling trend, indicating a delicate balance between bullish potential and the risk of pullback in the short term.