USD/JPY analysis: will the BOJ dare to change its monetary policy?
USD/JPY Current price: 110.97
- Yen strong as investors hope the BOJ will introduce some changes to its monetary policy.
- Â Market's reaction could be limited ahead of Fed's decision next Wednesday.
The USD/JPY pair trades uneventfully around the 111.00 level, as investors are in waiting mode ahead of the BOJ's monetary policy meeting, speculating of a possible tweak of its current ultra-loose policy following some rumors that made the rounds over the last couple of weeks. Early Monday, the BOJ offered to buy an unlimited amount of bonds for a third time this month, as the benchmark 10-year yield rose past 0.11%, reaching its highest in over a year-and-a-half, as yields have been unusually volatile ahead of today's meeting.
Chances that the BOJ will make a change to the current monetary policy are quite reduced, despite nervous speculators. The ongoing program has begun over 5 years ago, but inflation remains worryingly low, even despite the central bank rose the amount pushed into the system to ÂĄ80tn per year, a couple of years ago. Market players believe that the Bank of Japan can't continue with the current easing for too long. Â What has been sounding out loud these days is a potential move of ETFs buying away from the Nikkei 225 and towards the Topix index, on speculation equities' prices are highly inflated by BOJ's cash injections. An on-hold stance will likely disappoint yen bulls, but given broad dollar's weakness and the upcoming Fed' meeting next Wednesday, movements could be limited. Japan will also publish employment, housing, Â and Industrial Production data.
The pair edged slightly lower but remained within Friday's range. The pair has held below the 111.40 Fibonacci resistance for over a week already, and the short-term picture indicates that bears are still in control of the pair, as it is stuck around a flat 200 SMA and well below the 100 SMA, while the Momentum indicator turned south, now crossing its mid-line, while the RSI holds directionless around 44. Upcoming direction depends on how the market reacts to BOJ's decision and Japanese data, with a break below 110.58, the low set last week, opening doors for a steeper decline below the 110.00 figure.
 Support levels: 110.55 110.20 109.75
Resistance levels: 111.40 111.85 112.20
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
