- The BOJ retained ultra-low interest rates and its dovish outlook.
- The yen depreciated by more than 0.4% against the dollar.
- Japan’s Finance Minister cautioned against a yen depreciation that could harm the trade-dependent economy.
Today’s USD/JPY outlook is bullish as investors absorb the disappointing outcome of the BOJ policy meeting. The yen experienced a decline on Friday following the Bank of Japan’s (BOJ) decision to maintain its ultra-easy policy stance.
Moreover, this decision came just days after the US Federal Reserve signaled a more hawkish approach. Consequently, it added pressure on the Japanese currency and increased the possibility of intervention.
Notably, after its two-day policy meeting, the BOJ retained ultra-low interest rates and its dovish outlook on future monetary policy. This decision was made despite Governor Kazuo Ueda’s previous statement earlier in the month. He suggested that the central bank could have sufficient data by year-end to assess the possibility of ending negative interest rates. As a result, the yen depreciated by more than 0.4% against the dollar, reaching a session low of 148.25.
Meanwhile, data revealed that Japan’s core inflation had remained stable in August. Moreover, it exceeded the central bank’s 2% target for the 17th consecutive month.
Japan’s Finance Minister Shunichi Suzuki said he would consider all available options, cautioning against a yen depreciation that could harm the trade-dependent economy.
These comments followed a day when the yen had already fallen to a 10-month low due to higher US Treasury yields. This decline occurred following the Federal Reserve’s more restrictive stance on Wednesday, which increased the likelihood of prolonged elevated US interest rates.
USD/JPY key events today
After the BOJ policy meeting, investors are awaiting one crucial report from the US.
- The S&P global services PMI report.
USD/JPY technical outlook: Trend continuation hinges on bulls making a new high.
The charts show that the USD/JPY pair has crossed above the 148.03 resistance level. At the same time, the price has returned above the 30-SMA, showing a possible continuation of the bullish trend. Bears attempted to seize control by pushing the price below 30-SMA. However, they failed to hold the price below the SMA.
Moreover, the RSI dipped below 50 before returning to bullish territory. Still, bulls must make a new high to confirm a trend continuation. It would mean taking out the 148.51 level.
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