- The BOJ is determined to maintain an ultra-loose monetary policy for now.
- Speculation is rife in the markets that the Bank of Japan may tweak the YCC as early as this month.
- Economists anticipate a 25-basis-point rate hike at the upcoming Fed policy meeting.
Today’s USD/JPY price analysis is bullish. On Tuesday, Bank of Japan Governor Kazuo Ueda acknowledged that the central bank still had some ways to go in sustainably achieving its 2% inflation target.
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This indicates his determination to maintain an ultra-loose monetary policy for now. Moreover, the BOJ diverges from the hawkish stance in other major central banks.
Speculation is rife in the markets that the Bank of Japan may tweak the YCC as early as this month. Notably, inflation has surpassed the 2% target for over a year. Consequently, there are mounting costs and market distortions due to extensive bond purchases to defend the yield cap.
Sources have informed Reuters that there are internal discussions regarding tweaking the YCC within the Bank of Japan. However, they are still in the preliminary stages, and no final decision has been made.
Elsewhere, the decline of the U.S. dollar, which occurred last week, has paused. However, traders have adjusted their expectations, foreseeing that the Federal Reserve might soon reach the peak of its interest rate increases.
In a Reuters poll, economists anticipate a 25-basis-point rate hike at this month’s upcoming policy meeting. Furthermore, most predict that it will mark the conclusion of the central bank’s current monetary tightening cycle.
USD/JPY key events today
Investors will watch for the building permits report from the US. They expect a decline in the figure, which would align with the recent cooling of the US economy.
USD/JPY technical price analysis: Bulls find resistance at 139.50.
On the charts, USD/JPY has gone from bearish to bullish. The price has broken above the 30-SMA, and the RSI is now above 50. This shows that bulls have taken the lead.
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Bears have been in charge for a while, pushing the price down to the 138.01 support. However, they failed to sustain a move below this level. With buyers in the lead, the price will likely soon break above the 139.50 resistance and retest the 141.02 key level. However, if the 139.50 resistance holds firm, the bears might return to retest 138.01.
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