USDJPY Gains Still Expected Even With Japan Rate Decisions

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Japan Interest Rate Decision

Japan Interest Rate Decision

Bank of Japan (BOJ) policy board members come to a consensus on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the JPY, while a lower than expected rate is negative/bearish for the JPY.

Release Date Time Actual Forecast Previous
Jun 16, 2020 01:58 -0.10%
Apr 28, 2020 01:56 -0.10%
Mar 16, 2020 01:00 -0.10% -0.10% -0.10%
Jan 20, 2020 23:00 -0.10% -0.10% -0.10%
Dec 18, 2020 23:00 -0.10% -0.10% -0.10%
Oct 30, 2020 23:00 -0.10% -0.10% -0.10%

By Noreen Burke – After a week that saw global stock markets crash with the coronavirus outbreak ending a years-long bull run global central banks will be under more pressure to act in.

By Noreen Burke – It’s a busy week ahead with the first central bank meetings of the year taking place in the Euro Zone, Japan and Canada, which may help set the tone for 2020.

(Bloomberg) — The Bank of Japan left policy untouched Thursday as a government stimulus package, progress in U.S.-China trade talks and signs of a bottoming of the global slowdown brightened the.


As central banks around the world have acted to stem the economic fallout from the global threat of the coronavirus, one of the most volatile currency pairs has been the USD/JPY. As you may be aware.

Last week, countless traders became familiar with the overnight price thresholds on U.S. equity index futures. Lest you’ve forgotten, futures contracts on the S&P 500 can only move higher or.

The fourth week of heightened volatility will see financial markets continue to focus on the coronavirus spread across Europe and the US. The economic impact of the virus is deepening, and.

BoJ Interest Rate Decision Discussion

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Action Points to USD/JPY Gains

by Jamie Saettele, CMT , Sr. Technical Strategist and David Song , Currency Analyst

With the Federal Reserve removing the zero-interest rate policy (ZIRP) in 2020, the normalization cycle in the U.S. accompanied by the quantitative/qualitative easing (QQE) program in Japan may fuel a bullish outlook for USD/JPY amid the deviating paths for monetary policy.

The updated projections from the Federal Open Market Committee (FOMC) suggests the central bank will sound more hawkish in 2020 and take a standardized approach to implement higher borrowing-costs as the board pledges to further adjust policy in the months ahead. With the U.S. approaching ‘full-employment,’ data prints highlighting a stronger recovery may encourage the Fed to push through another rate hike in the first-half of 2020 but, the disinflationary environment across the major industrialized economies may become a growing concern for central bank officials amid the slowdown in global growth accompanied by the persistent weakness in commodity prices. Despite the unanimous vote to lift the benchmark interest rate in December, the external risks surrounding the region may spur a rift within the 2020 FOMC and generate headwinds for the greenback as Chair Janet Yellen appears to be in no rush to further normalize monetary policy.

At the same time, the Bank of Japan (BoJ) may continue to disregard market expectations for a larger asset-purchase program and largely retain a wait-and-see approach in the first-half of 2020 as Governor Haruhiko Kuroda remains confident in achieving the 2% inflation target over the policy horizon. Even though the BoJ fine-tunes its QQE program in December and keeps the door open to ramp up its non-standard measures, it seems as though the bar remains high for the central bank to embark on a more aggressive approach to expand its balance-sheet especially as the Japanese economy avoids a technical recession. In turn, more of the same from the BoJ in 2020 may undermine the bullish outlook for USD/JPY and heighten the appeal of the Japanese Yen as market participants scale back bets for a larger asset-purchase program.

Nevertheless, the current course for monetary policy in the U.S. and Japan may produce a further advance in USD/JPY over the coming months, and the pair may continue to retrace the decline from back in 2002 as the Fed gears up to remove the emergency measures throughout the year ahead. However, a more delayed normalization cycle in the U.S. paired with a material shift in the BoJ’s stance may produce range-bound conditions during the first three-months of 2020 as market participants gauge the prospects for future policy.

Japanese Yen’s ‘Funding Currency’ Status Raises Risk for Larger USD/JPY Correction

The Japanese Yen’s ‘funding-currency’ status may continue to play a key role in dictating price ahead of the key interest rate decisions as USD/JPY broadly moves in tandem with the global benchmark equity indices.

Data source: Bloomberg. Chart Prepared by David Song

Indeed, efforts by the community of global central bankers to avert a further slowdown in the world economy may prop up market sentiment, but fear of a ‘hard-landing’ in China paired with the weakened outlook for Emerging Markets may continue to sap investor confidence and spark a further unwinding of the ‘carry trade.’ In turn, shifts in risk trends may largely accompany turns in USD/JPY as market participants weigh the outlook for monetary policy.

Technical Analysis: USD/JPY at Long-Term Juncture
USD/JPY is at an important long term juncture. First, let’s look at the long term Elliott wave picture . Chapter 7 of Sentiment in the Forex Market (published in 2008) reads.
“Wave 4 completed in late July 2007 in the form of a triangle (a-b-c-d-e). Expectations then are for a drop below the 1995 low at 81.12 to complete wave 5. Since triangles lead to terminal thrusts, the 5 th wave low will give way to a rally that could reach the triangle extreme near 150.00. In summary, expect price to come under 81.12 before a multi-decade low is registered.”

The rally from the 2020 low counts as a completed 5 wave advance. The implication is that a corrective process (weakness to a broad sideways range that could last at least several years) unfolds before strength can resume towards 150. That corrective process may be underway now, especially considering that the top in 2020 registered near a long term trendline confluence (underside of line that extends off of the 1995 and 2005 lows and line that connects the 1990 and 1998 highs) and the 2007 high (end point for cycle wave 4). Also, important reversals have materialized in years that end in 5 and a top registered after the last 3 year rally (1994-1996).

Trading wise, price action since December 2020 would complete a head and shoulders top on a drop below 115.57 and yield a target zone of 105.30-106.50. The target zone would be ‘in line’ with Elliott wave guidelines that suggest a corrective process terminates near the former 4 th wave of one less degree (that zone is 101.07-105.44).

In summary, long term technical observations reveal a potential inflection point in the USD/JPY exchange rate. Trading behavior in 2020 may look quite different from what traders have seen over the last 4 years.

Market Extra

Joseph Adinolfi

Sustained strength in the yen would be a major stumbling block for Japan’s struggling economy

Japanese Prime Minister Shinzo Abe needs “Brexit” like he needs a hole in his head.

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The Japanese yen is once again outperforming all of its G-10 rivals, driven by anxieties that U.K. voters might elect to leave the European Union during next week’s referendum—an outcome many believe would spark a massive selloff in global markets while potentially plunging the U.K. into a recession.

This is unwelcome news for Japanese officials, who are struggling to revive Japan’s economy after two decades of stagnation. Those officials found respite in May, when the Federal Reserve warned that a rate increase could happen as soon as this summer, causing the dollar to strengthen broadly against its rivals, including the yen.

But those expectations have since faded, and the U.K.’s possible exit from the European Union threatens to send the yen, a popular haven during times of global market unrest, to new highs.

Japan’s economy has contracted during five of the last 10 quarters—though many economists said the 0.5% growth rate during the first quarter was surprisingly strong, giving officials some cause for optimism.

Still, they fear that sustained strength in its currency could hamper growth, analysts said.

The impact of the stronger yen on Japan’s economy is twofold, said Doug Borthwick, head of currency trading at Chapdelaine & Co.

On the plus side, a strong yen makes imported goods cheaper for Japanese consumers. But it also makes goods produced in the country more expensive on the global market, potentially hurting exporters.

Japan’s longstanding status as one of the world’s largest net creditors—meaning Japanese investors own far more foreign assets than foreigners own Japanese assets—is one key reason the currency is often sought as a haven during times of economic distress.

The yen strengthened sharply against the dollar in the opening months of the year, causing tensions in Japan to flare before the currency trimmed its gains somewhat in May.

One dollar USDJPY, +0.07% bought ¥105.91 Wednesday, hovering just above its weakest level against the Japanese currency in more than 18 months. By comparison, it traded at ¥106.02 late Tuesday in New York, and It remains more than 12% weaker against the yen.

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The strengthening yen has heightened political pressures on Prime Minister Shinzo Abe, whose Liberal Democratic Party faces a tough challenge this summer in key elections for Japan’s Upper House.

Recently, Abe said he’d delay a planned increase in Japan’s sales tax until 2020, which was widely seen as an effort to shore up support for his Liberal Democratic Party ahead of key summer elections for Japan’s Upper House.

If Britons vote in favor of leaving the EU at a referendum scheduled for June 23, investors worry that it could spark a massive selloff in global markets. According to recent polls, support for the leave camp has grown over the past few weeks, helping to spur a round of haven buying. In addition to the yen, other assets viewed as safe, like gold and government bonds, have seen prices surge.

Risks also abound heading into a policy announcement from the Bank of Japan on Thursday.

A team of rates and currency strategists at Bank of America said the dollar could break below ¥105 if the Bank of Japan stands pat at its policy meeting on Thursday. Economists overwhelmingly expected the BOJ to expand its easing efforts at its prior meeting in April. When it didn’t, the dollar shed more than 2% of its value against its Japanese rival

Despite repeated warnings from Japanese officials that they would take action to combat “one-sided” moves in the yen, Borthwick said the Bank of Japan has little choice but to sit on its hands.

The international community said little when the Bank of Japan expanded the money supply and cut interest rates with the goal of weakening its currency. Critics of Abe’s administration see the weakness in the yen as one of its few concrete accomplishments. The dollar traded below ¥80 as recently as late 2020, shortly before Abe was elected.

But their attitude has undergone a recent shift. Earlier this year, the U.S. Treasury Department placed Japan on a newly created watch list for monitoring alleged currency manipulators.

“Back then, G-20 was happy to allow Japan to do that as long as it was to stimulate their internal economy,” Borthwick said. “These days, the view has changed considerably. The latest G-20 meeting in Japan, they turned around and said competitive devaluation is no longer an option.”

U.S. oil prices jump 9% as key OPEC+ production conference set to get under way

Oil futures rose in electronic trade early Thursday as investors awaited the outcome of a crucial meeting of OPEC and its allies that is intended to end a price war between Russia and Saudi Arabia.


USD/JPY: Waiting for clearer clues

Equities advance following US Senator Bernie Sanders’ decision to get off the presidential race. Attention shifts to the US employment situation, weekly unemployment claims foreseen up by millions. USD/JPY neutral in the short-term, bears to take over on a break below 108.25.

Latest USDJPY News

USD/JPY: Bounce towards 109.50/110.50 looks to be a good sell opportunity – Westpac

USD/JPY: Ranging within familiar levels

Currencies: US dollar strength will begin to wilt as the COVID-19 impacts in the US growth – Westpac

Technical Overview.

The USD/JPY pair is holding ground, with a short-term neutral stance. In the 4-hour chart, the pair is just below converging 20 and 100 SMA, while the Momentum indicator flat at around its 100 level. The RSI eases, but also stands around its mid-line. The main resistance is 109.38 the weekly high, while the downside will remain limited as long as the price holds above 108.25.

Support levels: 108.25 107.90 107.50

Resistance levels: 109.00 109.40 109.80

Fundamental Overview

There’s little action across the FX board this Thursday, with majors ranging within familiar levels. The USD/JPY pair continues to trade just below the 109.00 mark, although holding on to weekly gains. The greenback remains generally weak, as investors still favour high-yielding equities. Wall Street surged after US Senator Bernie Sanders get off the presidential race, clearing the path for his rival, Joe Biden. The positive momentum backed a recovery in Asian and European equities, although such movement was not reflected in currencies’ trading.

BOJ’s Governor Kuroda was on the wires during the Asian session, remarking the economic uncertainty related to the ongoing coronavirus crisis. As expected, he added that policymakers won’t hesitate to add easing if necessary. The US will publish today initial jobless claims for the week ended March 27, expected once again in the millions.

Meanwhile, the pandemic continues to expand. Some modest positive news are being overshadowed by those coming from the US as it reported almost 2,000 deaths for a second consecutive day. The number of cases in the country is above 432K. Italy seems to have reached its peak, but the illness continues to escalate in the rest of Europe. The end of the economic stalemate is still far.

Big Picture



USD/JPY Forecast: Will the news get worse?

The USD/JPY finished higher on the week, though it remains well below its peaks of mid and late March, as moderate risk aversion still orders markets. From Wednesday’s low of 106.92 the pair rose on Thursday and Friday to the high close at 108.54.

FXS Signals

Latest USDJPY Analysis

Latest USDJPY Analysis

EUR/USD hovers around 1.0850 ahead of Eurogroup meeting, US data

EUR/USD is trading around 1.0850 as tensions mount ahead of the Eurogroup meetings which have previously ended in acrimony. US jobless claims, consumer confidence, and Fed Chair Powell’s speech are all eyed.

GBP/USD trades around 1.24 after as Johnson’s condition, US data eyed

GBP/USD is trading around 1.24, consolidating its gains as UK monthly GDP disappoints with -0.1% in February. PM Johnson’s condition is stable, but he remains in intensive care. US jobless claims, consumer confidence, and Powell’s speech are awaited.

Crypto market shifting to the hyperspace

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Gold: Recovery rally weakens demand for put options

Gold has gained significant ground over the last couple of weeks. The yellow metal bottomed out near $1,515 on March 20 and was last seen trading near $1,650 per ounce, representing a 0.38% gain on the day. Prices hit a high of $1,678 on Tuesday.

USD/JPY: Waiting for clearer clues

Equities advance following US Senator Bernie Sanders’ decision to get off the presidential race. Attention shifts to the US employment situation, weekly unemployment claims foreseen up by millions. USD/JPY neutral in the short-term, bears to take over on a break below 108.25.




Influential Institutions & People for the USD/JPY

The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:

The Federal Reserve Bank (Fed)

On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System’s structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.

The Bank of Japan (BOJ)

The Bank of Japan is the central bank of Japan and it’s a juridical person established based on the Bank of Japan Act, nor being a government agency either a private corporation. The most important missions of the BOJ are the following: to issue and manage banknotes, to implement monetary policy and to ensure stability of the financial system. Almost all of the decisions are taken by the Policy Board, formed by a bunch of members working to provide currency and monetary control and setting the next moves that the central bank will take.

Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2020, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

Haruhiko Kuroda

Haruhiko Kuroda was nominated, by Prime Minister Shinzo Abe, as Governor of the Bank of Japan in March 2020. He had previously worked as President of the Asian Development Bank for 8 years. As the head of the BOJ, he has a major influence over the Japanese Yen. His words are usually followed by traders in order to find any clue of next possible trend in the currency.




The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of ‘Majors’, a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low-interest rate and is normally used in carrying trades. This is the reason why is one of the most traded currencies worldwide. In this pair, the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from the United States of America) and Japanese economies.

Trading this currency pair is also known as trading the “ninja” or the “gopher”, although this last name is more frequently used when referred to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is due to the fact that both currency pairs also use the US Dollar as the base currency. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.


The GBP/USD (or Pound Dollar) currency pair belongs to the group of ‘Majors’, a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called ‘The Cable’, referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.

The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from the United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.


The EUR/USD (or Euro Dollar) currency pair belongs to the group of ‘Majors’, a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity of Euro Dollar is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.

Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.

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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

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