The USD/JPY is trading down 0.2% at around ¥110.75 against the US Dollar after the Bank of Japan decided to leave the monetary policy unchanged saying inflation is creeping towards the target. The USD/JPY knee-jerked lower to ¥110.50 in the initial reaction to the policy decision, but retreated higher to ¥111.19 soon after the Bank of Japan governor Haruhiko Kuroda said the asset purchasing is not being considered by the Bank under current inflation outlook.
1. Technical Overview
Bears would now be eyeing to test monthly lows support near 110.20 area, below which the pair is likely to break below the key 110.00 psychological mark and head towards testing mid-September lows support near 109.55 level.
On the upside, 110.80 area now becomes an immediate resistance, which is closely followed by resistance at the 111.00 handle and the 111.20-30 region. Momentum beyond the mentioned hurdles could get extended back towards the very important 200-day SMA hurdle near the 111.75 region.
USD/JPY PRICE SENTIMENT
USD/JPY BULLISH PERCENTAGE INDEX
The major pair has done a fabulous job playing a range that dates back to early 2017, with rallies well capped up in the 114.00 area and dips well supported down towards 108.00. After stalling out in November at the range high, the market has continued with this play, which means any rallies, should be sold for another drop back into the 107-108 range base.
USD/JPY Pivot points
USD/JPY trading positions
2. Fundamental Overview
The USD/JPY pair extended the post-BOJ retracement slide and slipped below mid-110.00s in the last minute.
With investors looking past today's dovish remarks by the BOJ Governor Haruhiko Kuroda, during the post-meeting press conference, a sharp retracement in the US Treasury bond yields once again failed to assist the pair to build on an early move back above the 111.00 handle.
The market also seems to have digested the news of a deal to temporarily end the US government shutdown, with a modest US Dollar pull-back from highs exerting some additional downward pressure on the major.
Meanwhile, traders seemed to have largely ignored the prevalent positive trading sentiment around European equity markets, which tends to weigh on the Japanese Yen's safe-haven appeal, with the US bond yield dynamics acting as a key determinant of the pair's sharp retracement since late Asian/early European session.
From a technical perspective, a decisive break below mid-110.00s points to a fresh bearish break and hence, a follow-through weakness, amid lack of fresh fundamental catalyst, now looks a distinct possibility.
USDJPY FUNDAMENTALS TODAY
3. Latest News & Analysis
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 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.
On the other
Haruhiko Kuroda was nominated, by Prime Minister Shinzo Abe, as Governor of the Bank of Japan in March 2013. 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.
Janet L. Yellen (born August 13, 1946) took office as Chair of the Board of Governors of the Federal Reserve System (Fed) on February 3, 2014, for a four-year term ending February 3, 2018. She had already previously served as a Vice Chair from 2010 to 2014. This American economist also serves as Chairman of the Federal Open Market Committee (FOMC), the System's principal monetary policymaking body. Her declarations are also an important source of volatility, especially for the US Dollar and the currencies traded against it.
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
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 carry trades. This is the reason why is one of the most trades 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 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 reffered 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 dued 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.
USDJPY 2017 YEARLY FORECAST
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', reffering 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 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 is one of the 'Majors', or most important pairs in the world. This group also includes GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The Euro Dollar 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 this 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.
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.