When is the BOJ rate decision and how could it affect USD/JPY?

Anil Panchal FXStreet

Early on Tuesday, around 03:00 AM GMT, the Bank of Japan (BOJ) will announce routine monetary policy meeting decisions after a two-day brainstorming session. Following the rate decision, BOJ Governor Haruhiko Kuroda will attend the press conference around 06:00 AM GMT to convey the logic behind the latest policy moves.

The Japanese central bank is widely expected to keep the short-term interest rate target at -0.1% while directing 10-year Japanese Government Bond (JGB) yields toward zero.

Although the BOJ isn’t expected to offer any change in its monetary policy, the major central banks' latest hawkish moves and Japan's inflation fear to highlight today’s BOJ as a critical event for the USD/JPY traders. Also increasing the importance of the BOJ announcements are the chatters over Governor Haruhiko Kuroda’s retirement and the government’s help to BOJ tighten the policy afterwards.

Ahead of the event, FXStreet’s Valeria Bednarik said,

An on-hold BoJ should help the pair advance, but with the broad USD weakness, gains are likely to remain limited. Hints on upcoming tightening should send USD/JPY close to the aforementioned November low.

How could it affect the USD/JPY?

USD/JPY picks up bids to extend the week-start gains and refresh intraday high, near 137.40 ahead of the Bank of Japan’s (BOJ) monetary policy announcements. The pair’s latest run-up could be linked to the firmer US Treasury bond yields and the market’s preparations for the BOJ amid hawkish hopes.

Japanese policymakers have already turned down the expectations of any significant moves from the Bank of Japan (BOJ). However, the recent announcement of bond-buying and talks of the town supporting the official push for higher rates in the future push the USD/JPY bears.

The same could quickly drag the USD/JPY pair towards a 12-day-old support line near 135.00. However, the risk-off mood and firmer USD, as well as fewer odds of the BOJ’s hawkish mood, are likely to favor the short-term USD/JPY buyers.

Technically, USD/JPY bulls need a clear upside break of the 21-DMA, currently around 137.40, to keep reins. In contrast, a downside break of the aforementioned support line of around 135.00 won’t hesitate to direct sellers towards the monthly low of 133.62.

Key Notes

USD/JPY Price Analysis: Could be coiling ahead of a significant breakout

Bank of Japan Preview: Policymakers can boost the JPY

About BoJ Rate Decision

The Bank of Japan announces the BoJ Interest Rate decision. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises the interest rates, it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view of the Japanese economy and keeps the ongoing interest rate or cuts the interest rate, it is negative or bearish.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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