USD/JPY: Bears in control as fears prevail
The BOJ left its monetary policy unchanged but downgraded growth and inflation forecasts. The focus now shifts to US Q3 Gross Domestic Product that is seen posting a record bounce. USD/JPY is technically bearish and about to break below September monthly low.
Latest JPY News
The USD/JPY pair is pressuring the weekly low, retaining its bearish bias in the near-term. The 4-hour chart shows that the 20 SMA is accelerating its decline near the mentioned weekly low and well below the larger ones, which also head south. Technical indicators maintain their downward slopes within negative levels, approaching oversold readings. The pair needs to clear 103.99, September low, to extend its slide further during the upcoming sessions.
Support levels: 103.95 103.50 103.20
Resistance levels: 104.45 104.70 105.10
The risk-off mood persists across the FX board, although major pairs are less volatile than on Wednesday, waiting for first-tier events. The USD/JPY pair is trading near the 104.00 figure, after hitting a daily high at 104.50 during the Asian session. The Japanese currency came under selling pressure after the Bank of Japan announced the outcome of its latest meeting.
As widely anticipated, policymakers left rates unchanged at -0.1% and will continue to buy JGBs to keep 10-year yields at around 0%. Also as expected, policymakers trimmed growth and inflation forecasts for the current fiscal year, although at the same time said they expect a stronger bounce next year. As it happens with other central banks, they also warned the outlook is highly uncertain and dependent on the pandemic developments. The country released September Retail Trade, which fell 8.7% YoY, worse than anticipated, and the October Consumer Confidence Index that improved to 33.6 from 32.7.
The focus now shifts to the US Q3 Gross Domestic Product, with the annualized figure seen improving from -31.4% to 31%, a record bounce. At the same time, the European Central Bank will announce its latest decision on monetary policy.
SPECIAL WEEKLY FORECAST
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The once and future US stimulus package is the market intervention of the month. As the Republicans and Democrats try to wring as much electoral advantage from negotiations, statements of hope for a deal from Democratic House Speaker Nancy Pelosi and President Donald Trump on Wednesday, sent the USD/JPY cascading to a four-week low.