The USD/JPY looks set to break below 110.00 levels soon after the Bank of Japan (BOJ) governor Kuroda set 1.5 percent inflation rate as a trigger for change in the current monetary policy.

1.5 percent inflation target a trigger for policy change

As per Reuters report, BOJ Governor Haruhiko Kuroda at his post-meeting news conference said-

"Japan’s economy is expanding moderately but inflation remains weak. Other countries are facing similar situations, but unlike these countries, many of whom are seeing inflation move around 1.5 percent, inflation excluding energy costs is barely above zero percent in Japan"

Kuroda's comment indirectly says that policymakers would start telegraphing a change in the monetary policy once inflation nears 1.5 percent. So, the new trigger has been brought down/revised lower to 1.5 percent from 2.0 percent.

Hence, the Yen is likely to price-in the drop (from 2% to 1.5%) in the trigger for policy change.

Change in language on inflation could boost Yen

"Inflation expectations are moving sideways recently",  the BOJ said in its quarterly report compared to the previous report, which talked about the weakness in inflation expectations.

The change in language on inflation expectations and the downward revision of the trigger for policy change is likely being read as hawkish development, indicates the decline in USD/JPY from 111.18 to 110.70 in the last two hours.

Further, the technical setup favors downside, hence, the spot looks set to explore sub-110.00 levels soon.

4-hour chart

  • The above chart shows a symmetrical triangle pattern.


  • A downside break of the symmetrical triangle looks likely, courtesy of the above discussed macro/fundamental factors. Such a move would signal continuation of the sell-off from the high of 113.386 and open doors for a sell-off to 108.72 (50% Fib R of 98.787-118.662).
  • Bullish scenario - An upside break of the symmetrical triangle pattern could yield a move to 111.48 (Jan. 19 high).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD continues to decline toward 1.0250 during the American trading hours on Friday. After the data published by the UOM showed that the long-run inflation outlook rose to 3% in August from 2.9% in July, the dollar gathered strength against its rivals, weighing on the pair.


GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD is trading deep in negative territory near 1.2100 during the American session on Friday. With the UoM's Consumer Sentiment Survey pointing to a modest increase in the long-run inflation outlook, the US Dollar Index extended its rally, reflecting a broad dollar strength.


Gold clings to modest gains above $1,790

Gold clings to modest gains above $1,790

Gold stays relatively resilient on Friday and trades modestly higher on the day above $1,790. Although the greenback continues to outperform its rivals on the latest US data, falling US Treasury bond yields help XAU/USD hold in positive territory.

Gold News

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shytoshi Kusama, the project leader of Shiba Inu announced the launch of Shiba Eternity for Vietnamese players. The game is available for testing and the team has asked users for their review. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!