USD/JPY: Recovers from five-week low ahead of BOJ rate decision

USD/JPY regains some poise as S&P 500 futures rise 1%.
The BOJ is likely to downgrade inflation forecasts.
The central bank is unlikely to take provide immediate stimulus.

Omkar Godbole FXStreet Contributor

USD/JPY has bounced up from five-week lows seen Wednesday alongside an uptick in the US stock futures.

The pair is currently trading near 104.39, representing marginal gains on the day, having printed a low of 104.11 during Wednesday's European trading hours. That was the lowest level since Sept. 21.

The global stock markets fell sharply on Wednesday as a rising number of coronavirus cases across Europe and the US threatened to derail the global economic recovery. The risk-off mood strengthened the demand for anti-risk currencies like the Japanese yen. As such, the pair dropped to multi-week lows in Europe but trimmed losses while heading into the NY close, as the dollar also drew haven bids.

Currently, the futures tied to the S&P 500 are signaling risk reset with 1% gains. Hence, the FX markets' anti-risk action has stalled, allowing for a bounce in USD/JPY.

BOJ to maintain status quo

The Bank of Japan is expected to keep interest rates, and other policy tool s unchanged on Thursday but downgrade inflation and growth forecasts.

However, that may not translate into aggressive yen selling as the BOJ is unlikely to take immediate action in response to weak inflation. The central bank is already running an ultra-easy monetary policy for more than seven years and looks to have run out of ammo.

Hence, the focus remains on the broader market sentiment.

Technical levels

USD/JPY

Overview
Today last price	104.39
Today Daily Change	0.05
Today Daily Change %	0.05
Today daily open	104.32

Trends
Daily SMA20	105.27
Daily SMA50	105.53
Daily SMA100	106.11
Daily SMA200	107.17

Levels
Previous Daily High	104.56
Previous Daily Low	104.12
Previous Weekly High	105.75
Previous Weekly Low	104.34
Previous Monthly High	106.55
Previous Monthly Low	104
Daily Fibonacci 38.2%	104.28
Daily Fibonacci 61.8%	104.39
Daily Pivot Point S1	104.11
Daily Pivot Point S2	103.89
Daily Pivot Point S3	103.66
Daily Pivot Point R1	104.55
Daily Pivot Point R2	104.77
Daily Pivot Point R3	104.99

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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