USD/JPY Price Analysis: BOJ to Sustain Rates, Monetary Stimulus

• The Bank of Japan (BOJ) is gearing up for its monetary policy meeting.

• The yen reached a 10-month low of 147.95 per dollar last week.

• Investors will look for clues on the Fed’s next move.

The USD/JPY price analysis is bullish as the BOJ will likely keep low rates at the upcoming policy meeting. The spotlight is currently on the yen as the Bank of Japan (BOJ) gears up for its monetary policy meeting on Friday. 

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Notably, it reached a 10-month low of 147.95 per dollar last week. As of Tuesday, it remained close to that level, showing no significant movement at 147.63. Moreover, the last time the yen exhibited such weakness was last autumn when Japanese authorities intervened to support its value.

Expectations are that the BOJ will maintain ultra-low interest rates. Furthermore, it might reassure the markets that monetary stimulus will remain in place, at least for now. This is despite Governor Kazuo Ueda hinting at a potential departure from the central bank’s current policy stance. 

Rodrigo Catril, senior FX strategist at National Australia Bank (NAB), suggested that the BOJ might need new forecasts to provide the ammunition required for any shift or guidance regarding a potential policy change over the next six months to a year. Consequently, he anticipates a few surprises during Friday’s meeting.

Meanwhile, the US dollar remained relatively stable, fluctuating around 105.04, close to the six-month high it achieved last week.

Money markets are anticipating that the Federal Reserve will keep interest rates unchanged at its upcoming meeting, according to the CME FedWatch tool. However, the central focus will be on the Fed’s forward guidance. 

USD/JPY key events today

Investors will focus on one key economic report from the US.

• The building permits report.

USD/JPY technical price analysis: RSI signals potential bearish takeover.

The USD/JPY rally has stopped near the 148.02 resistance level. The bulls are now struggling to push beyond this level. This can be seen in the increased number of pullbacks, and the price is sticking close to the 30-SMA. 

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Still, the bias remains bullish as this is taking place above the 30-SMA, and the RSI is above 50. However, the bullish momentum has weakened. The RSI shows a bearish divergence that could lead to a bearish takeover with a break below the 30-SMA.

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• Source: https://www.forexcrunch.com/usd-jpy-price-analysis-boj-to-sustain-rates-monetary-stimulus/