Home USD/JPY Forecast: BOJ’s Kuroda Defends His Stimulus Program

USD/JPY Forecast: BOJ’s Kuroda Defends His Stimulus Program

  • Investors have lowered their expectations of rate cuts in the United States.
  • Interest rate futures have an 80% chance of a 25bps Fed rate hike.
  • Kuroda claimed his stimulus program was half successful.

Today’s USD/JPY forecast is bullish. The dollar gained support on Wednesday as investors lowered their expectations of rate cuts in the United States. There were fewer concerns about a banking crisis, and another stubbornly high inflation reading increased bets of a Fed rate hike.

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Bonds and interest rate futures partially undid the enormous gains they had made after three US banks failed within a short period.

Interest rate futures are placing an 80% chance of a 25 basis point increase in the United States next week.

Haruhiko Kuroda, the Bank of Japan (BOJ) governor, who leaves in April, claimed his ten-year monetary experiment was “half successful.” It involved enormous asset purchases to shock people from a deflationary mindset.

Kuroda shocked the conservative central bank and markets in 2013 by implementing a massive asset-buying program. Along with lowering borrowing costs, his policy aimed to shock the masses from deflation by unleashing a huge monetary stimulus.

Nevertheless, as the beneficial effects started to wane and the BOJ’s massive asset purchases reached their limits, the BOJ turned to a policy targeting interest rates. This began with the decision to implement negative rates in January 2016.

It imposed a cap on long-term rates eight months later as part of a yield curve control (YCC) policy, which is still in effect today.

Experts believe the BOJ will continue to undo Kuroda’s radical stimulus program under Kazuo Ueda’s leadership.

USD/JPY key events today

The release of the Producer Price Index report will provide investors with additional US inflation data. A report on retail sales will also be released, revealing the level of American consumer spending.

USD/JPY technical forecast: Bulls facing strong resistance

USD/JPY technical forecast

The 4-hour chart shows USD/JPY pulling back from the 30-SMA, with the RSI trading slightly above 50. Bulls are gaining momentum, but control still belongs to bears as the price trades below the SMA.

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Bulls have shown strength by pushing the price from the 132.55 support and above the 134.00 resistance. However, this move is still a pullback. Bulls can only take over when the price breaks above the SMA. Otherwise, we might see the downtrend resume and the price breaking below 134.00 and 132.55.

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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.