- The dollar is rising on global recession worries.
- Kuroda is facing criticism for weakening the yen with his comments.
- The BoJ’s monetary policy might change after Kuroda retires.
Today’s USD/JPY forecast is bullish as the dollar soars on recession worries. Investors are running for safety in the dollar as there is a lot of uncertainty in the global economy.
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Central banks are rapidly raising interest rates to try and tame inflation, and investors worry this might cause a global recession. The BoJ might also change its policy stance due to rising market pressures.
Haruhiko Kuroda is currently under attack due to the currency’s decline. He has to admit unwillingly that the bank may start easing its policy that limits bond yields once he retires in April.
Kuroda, who is known for being dovish, stated in a briefing last week that the BOJ’s guidance to hold policy rates at “current or lower levels” won’t change for around two to three years, which is far after the end of his second, five-year term in April.
The remark caused a dramatic drop in the yen value to the dollar from around 144 to 146, necessitating government intervention to support the currency for the first time in 24 years.
Four days later, Kuroda apologized for the statement and stated that it wouldn’t hold for very long and might alter if the economy recovered entirely from the effects of the COVID-19 outbreak.
The incident highlights a change in public opinion that now views years of extremely low rates as less favorable. It also maintains the possibility that the BOJ will modify its dovish outlook once Kuroda leaves.
USD/JPY key events today
Investors will pay attention to a pending home sales report from the US and a speech from Fed Chair Powell.
USD/JPY technical forecast: Yen bulls not ready to give up
Looking at the 4-hour chart, we see the price trading above the 30-SMA and RSI above 50. This is a sign that bulls are in charge. However, a closer look reveals that the price is caught in a large range with support at 142.00 and resistance at 145.00.
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At the moment, bulls are up against the range resistance. If the price can break above, the bullish trend will continue. However, if the resistance holds, the price might fall back to the support.
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