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  • The Bank of Japan might examine the consequences of its monetary easing.
  • The news has added to the yen optimism.
  • Investors are eagerly awaiting US inflation figures.

Today’s USD/JPY forecast is bearish. On Thursday, the yen rose in anticipation that the Bank of Japan will examine the consequences of its monetary easing.

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In early Asian trading, the Japanese yen increased roughly 0.7% to 131.58 per dollar in response to a Yomiuri report that the BOJ will assess the implications of its monetary easing at next week’s policy meetings and may take more measures to rectify yield curve distortions. 

The news comes after the BOJ’s unexpected adjustment to its bond yield control in December. However, the change did not address market distortions brought on by the central bank’s significant asset purchases.

Saktiandi Supaat, Maybank’s regional head of FX research and strategy, stated that the news “is likely to add on to the (yen) optimism.”

The upcoming BOJ meeting, along with the expected changes to the bank’s inflation forecast and the impending appointment of a new BOJ governor, will probably increase the anticipation of a policy change.

In other markets, the dollar held relatively steady ahead of the eagerly anticipated US inflation figures due later Thursday. This data will give more insight into how far the world’s largest economy’s inflation has been tamed and the Federal Reserve’s path toward raising interest rates.

The dollar has already fallen to new lows versus its peers this year due to expectations that the Fed may be concluding its aggressive drive to tighten monetary policy.

USD/JPY key events today

Investors are awaiting the US inflation report, which is expected to show that inflation eased in December. This will likely cause some volatility in the pair.

USD/JPY technical forecast: The next stop for bears is at the 131.01 support

USD/JPY forecast

USD/JPY has resumed its bearish move after consolidating near the 30-SMA for some time. The price is trading below the 30-SMA, and the RSI is below 50, showing bears are in control. The next pause for this move might come at the 131.01 support level.

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At this support, the price might break below or bounce higher. A break below would mean retesting the 129.75 support level. Bulls will only take control if the price breaks above the 30-SMA.

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