BOJ Holds 0.5% Rate: USD/JPY Eyes 147.20 as ¥330B ETF Sales Start
The BOJ left the short-term rate at 0.5% as expected and surprised with a plan to start selling ETF and J-REITs...
Quick overview
- The BOJ maintained the short-term rate at 0.5% and announced plans to sell ETFs and J-REITs, indicating a cautious approach to balance sheet normalization.
- Two board members dissented, advocating for a rate hike to 0.75%, reflecting differing views on monetary policy direction.
- Market participants will closely analyze Governor Ueda's press conference for insights on the pace and impact of the ETF sales on yen stability.
- Current trading levels for USD/JPY suggest a bearish-to-neutral outlook, with key levels to watch for potential price movements.
The BOJ left the short-term rate at 0.5% as expected and surprised with a plan to start selling ETF and J-REITs—a step towards shrinking the balance sheet built up over years of stimulus. Two policy board members dissented, wanting to hike to 0.75%.
Governor Kazuo Ueda will brief the press at 3:30 p.m. JST (06:30 GMT). For traders, the mix—steady rates plus gradual risk-asset sales—reads as cautious normalization rather than a sharp turn.
Context matters. Earlier guidance had the BOJ mapping out bond purchases down to around ¥3 trillion/month by March 2026, which was a slow-and-steady taper. Today’s decision adds an equity-risk leg to that unwind.
Markets will parse the press conference for pace, size and sequencing—especially how ETF sales (signaled around ¥330 billion a year) interact with JGB buying and yen stability.
USD/JPY: structure and signals
Into the announcement, USD/JPY traded in the 147–148 range, down after the post-Fed bounce. On the 4-hour chart, price is compressing inside a descending triangle: lower highs from the September swing near 148.90 into flat support at 147.20.
Repeated spinning tops and upper wicks near 148.10–148.40 show supply at the trend line. The RSI in the mid-40s is soft and a bearish 50/200-EMA setup keeps momentum cautious.
A break below 147.20 would confirm the pattern and target 146.25, then 145.47. A daily close above 148.90 would negate the setup and put 150.00 back in play.
USD/JPY: Trade levels and risk factors
Short-term is bearish-to-neutral while price is below the trend line. The backdrop: the Fed’s easing bias vs the BOJ’s glacial normalization can pull the pair in opposite directions, but today’s ETF-sale detail argues for less BOJ support for risk assets at the margin—yen-positive at the edges if growth holds.
Key risks include press-conference nuance, changes to the BOJ’s bond-taper path and surprise moves in US yields.
Actionable levels
- Bear: 4H close below 147.20 → 146.25 / 145.47
- Bull: Daily close above 148.90 → 149.50 / 150.00
- Momentum: Sub-200-EMA keeps sellers in play; above would neutralize
What to watch next
- Ueda’s color on ETF/J-REIT sale pace and any thresholds for pausing
- Guidance on JGB purchases into FY2026
- U.S. data and yields shaping the dollar leg of USD/JPY
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