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  • Bank of Japan’s meeting minutes showed that members agreed to maintain low rates.
  • Members also saw wage increases as the way to achieve the bank’s price target.
  • The BOJ vowed to continue supporting Japan’s weak economy as it recovers.

Today’s USD/JPY forecast is bearish as investors react to yesterday’s Bank of Japan meeting minutes. The minutes showed that policymakers agreed on low rates and saw wage hikes as key to Japan’s economic outlook.

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Members agreed that the economy still needed a lot of stimuli to weather rising commodity prices and supply disruptions brought on by COVID-19 restrictions in China.

“The board agreed that uncertainty surrounding Japan’s economy was extremely high,” the minutes showed.

“Many members spoke about the importance of wage increases from the perspective of achieving the BOJ’s price target in a sustained and stable fashion.”

According to the minutes, some policymakers saw inflation increasing and changing the perception that prices would rise and wages would stay relatively low. The bank maintained rates at -0.1% at the June meeting despite market pressure and vowed to continue supporting the economy as it recovered.

“Japan must create a resilient economy in which consumption continues to rise even when companies raise prices,” one board member was quoted as saying.

“The BOJ must maintain monetary easing until wage hikes become a trend and help Japan achieve the bank’s price target sustainably and stably,” another member said.

USD/JPY key events today

There won’t be any significant news releases from Japan today; however, the US will release the consumer confidence report. This report will show the change in confidence in the US economy and is an indicator of consumer spending. The new home sales report will give a clearer picture of the US housing market.

USD/JPY technical forecast: A second attempt to break below 136.00

USD/JPY forecast

The 4-hour chart shows the price trading below the 30-SMA, showing bears are in charge. Momentum also favors bears as the RSI trades below 50. The price found support at 136.001 after a strong leg down. At this point, the bulls have come in to retrace the recent move. This retracement might find resistance at the 30-SMA before the downtrend continues. 

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The bears will retest and possibly break below the 130.001 support level. However, if bulls get stronger, a break above the 30-SMA could take the price to retest 137.903, the July 22 resistance.

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