Home USD/JPY Price Analysis: BoJ Policymakers Open to Stimulus Withdrawal

USD/JPY Price Analysis: BoJ Policymakers Open to Stimulus Withdrawal

  • BoJ policymakers are beginning to have hawkish opinions.
  • Japan’s foreign reserves continued to shrink in October due to recent interventions.
  • Markets are on high alert as Japan might intervene again at the first sign of dollar strength.

Today’s USD/JPY price analysis is bearish as general dollar weakness strengthens the yen. According to a summary of opinions released on Tuesday, Bank of Japan policymakers discussed the need to look into the impacts of continued monetary easing and the potential impact of a future exit from ultra-low interest rates.

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The summary indicates that some policymakers are gradually opening up to the idea of eventually withdrawing the massive monetary stimulus implemented by Governor Haruhiko Kuroda nearly ten years ago. Such opinions might support the yen if they get louder.

On Tuesday, the Ministry of Finance reported that Japan’s foreign reserves continued to shrink in October after a record decline due to the largest-ever amount of yen-buying and dollar-selling intervention.

Although authorities are mum on intervention, market participants closely examine Japan’s sizable pool of foreign assets and intervention history for signs of how much more Japan would be willing to spend in its forays into the currency market.

“I wouldn’t be surprised if authorities conduct intervention one more time if dollar gains accelerate to hit a new high beyond 152 yen,” said Tohru Sasaki, head of Japan Markets Research at JPMorgan Chase Bank.

USD/JPY key events today

Japan will release the Current Account Index, which measures the difference in value between exported and imported goods, services, and interest payments during the reported month.

USD/JPY technical price analysis: Bears poised to break support

USD/JPY price analysis

Looking at the 4-hour chart, we see the price trading below the 30-SMA and the RSI below 50. This is a sign that the current move has strong bearish momentum. Bears have had control since they took over at the 148.45 resistance level.

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On a larger scale, we see the price trading within a wedge with clear support and resistance lines. The price is currently trading close to the support line. This is close to the 146.02 support level, making it a strong support zone. The bears still look strong and might attempt a break below this zone. Success would see the price fall to make lower lows. It will likely retest the 30-SMA if bears fail to break below.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.