BoJ Rate Decision: How to trade USD/JPY?

Usman Ahmed Forex92

The U.S. Dollar (USD) rose against the Japanese Yen (JPY) last week, increasing the price of the USDJPY pair to more than 103.00, ahead of the release of Japan's interest rate decision.

Technical Analysis

As of this writing, the USDJPY pair consolidates around 103.84. The price is likely to face hurdle near the given below price levels:

Short-Term Resistance Levels

104.25 - A major horizontal resistance

104.75 - The high of December 02, 2020

105.27 - The Fibonacci retracement (61.8%)

On the downside, the pair is likely to find some support near the given below price zone:

Short-Term Support Levels

103.46 - The low of December 29, 2020

102.58 - A major horizontal support

102.00 - The psychological level

Bank of Japan (BOJ) Interest Rate Decision

The bank of Japan (BOJ) is scheduled to decide the new interest rate for the country on Thursday (January 21, 2021). As per the average estimate of economists, Japan's interest rate should remain unchanged at -0.1% in December, as compared to the reading of -0.1% in the month before.

The Bank of Japan's (BOJ) interest rate decision reflects the economic conditions of the country. A hawkish approach by the BOJ towards the inflationary outlook of the country's economy indicates economic growth. On the other hand, if BOJ remains dovish and cuts interest rates, then it signals a weakened economy. Generally speaking, a higher than expected reading suggests a bearish market for the USDJPY pair and vice versa.

Conclusion

Considering the macroeconomic and technical outlook of the pair, here is a short to medium term trading plan for USDJPY:

Sell on a breakout below 103.50 with a stop placed around 104.50 and target around 102.00

Author

Usman Ahmed

Forex92

Usman Ahmed is a currency trader and financial market analyst with more than a decade of active trading experience.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold holds gains near $5,000 as China's gold buying drives demand

Gold price clings to the latest uptick near $5,000 in Asian trading on Monday. The precious metal holds its recovery amid a weaker US Dollar and rising demand from the Chinese central bank. The delayed release of the US employment report for January will be in the spotlight later this week.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.