Market Analytics and Considerations
Key Notes
- Regarding YCC and the likelihood for future hikes in interest rates all eyes are on BoJ.
- With a forming “death cross” that could be signaling to additional decline, USD/JPY strikes seven-month depressions.
Fundamental outlook for the Japanese Yen: Neutral
As a result of both USD depreciation, spurred on by a drop in U.S. inflation in addition to market confidence regarding a more active Bank of Japan, the Japanese Yen finished the previous week on the offensive (BoJ). The interest rate decision by the BoJ (see economic schedule below) is set for Wednesday of the following week, which will serve as the main central focus for USD/JPY.
By next could see adjustments to Yield Curve Control (YCC) initiatives or possibly a complete rejection of the existing ultra-lax monetary policy in response to growing inflationary pressures. The BoJ has maintained a dovish tone so far though during what has been a largely worldwide cycle of rate increases for other monetary authorities, although money markets are preferring a start of rate increases between June/July in the year. This timeframe might be moved up as soon as March, relying on the what occurs in the presentation coming weeks. The Yen, on the other hand, might be negatively affected by the BoJ’s prognosis remaining intact, especially in light of the exuberance displayed by market values of Friday.
Technical View
Here on daily USD/JPY graph, price action is dropping just below psychological support area of 130.00, which has now become resistance. Renewed annual declines might challenge the swinging support bottom at 126.36, which was previously reached in May 2022. The duo will presumably appreciate if the BoJ meeting results in just minor changes; nevertheless, because long-term dynamics favoring the JPY, there may be potential around market corrections to the upward.
When the 50-day SMA intersects underneath the 200-day SMA, it is termed as a “death cross,” and this signal is exceedingly pessimistic According to the Moving Average (MA) indicator’s latency, this preliminary move may have already been completed. However, given the hawkish differential here on Relative Strength Index (RSI), a short resurgence uphill before such a following step down, may still be in the cards.
Major resistance levels:
133.63
130.00
Major support levels:
126.36
125.00
With 58percent of traders now maintaining long positions, market participants are presently overall LONG on the USD/JPY exchange rate (. We frequently adopt a pessimistic viewpoint on mood, which results in a near-term bearish tendency.
