USDJPY did what it should do as Per my analysis,what next?Hello fellow traders , my regular and new friends!
Welcome and thanks for dropping by my post.
Here's my evaluation of the pair and moving forward what is there to expect.
But let's revisit what has happened over this week. If you have not yet seen my previous post of USDJPY , you maybe refer to link below or here >>
Let's roll back on time on USDJPY to Monday, the start of the week. We see that it has been super bullish on Monday clearing the 145 and even 146.5 level that I have mentioned.
First of all we don’t see any sign on turning even on the one hourly chart for UJ. Therefore, nothing for us to short on that day.
The interesting part comes on Tues, where it seems like all the technicals aligned.
You can refer back to the analysis post I mentioned last week. I mentoned about the downtrend line on the daily and H4. 146.5 area also coincide by the last support turned resistance I hightlighted. So, naturally here's the place for us to look for short, which we saw a breakout of the consolidation and it came lower.
If you missed that, we do have opportunities to short 2 more times before the last strong move downwards on Thursday 3am Singapore time.
And then, for the rest of Thurs to Fri, it has been consolidating.
So, what to expect next?
Like I have mentioned, if the BOJ has no sign of increasing its rate, tighten their monetary policy, very likely we would see the USDJPY to resume back its longer term uptrend moves.
BUT if the BOJ indeed has some "actions" or hint to increase it rate and tighten, the likely the market will move further downwards. And that's probably why the USDJPY has consolidated right on its up trendline of the year since Jan 2023.
Let's see how PA unfolds from here on!
Happy Trading!
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Boj
USDJPY: Strong Elliott Wave Bearish Reversal On Hawkish BoJUSDJPY is coming sharply to the downside this week as hawkish BoJ hinted a potential policy change in 2024. We see strong breakdown on USDJPY, below the chanel support line on the daily chart which makes us think that this is a new higher degree decline that should be done with three waves down minimum. So be aware of more weakness in weeks ahead, especially after we see any bounce back in wave 2 or B rally.
One of the reasons why USDJPY can be headed much lower is also the US nod market which can be bottoming, as speculators believe that the FED is done. So with speculators betting on hawkish BOJ and "dovish" FED for 2024, the pair can be headed to 137.
Grega
USDPY Long term Sell signalNavigating the JPY and Japanese Bond Market Dynamics: Unraveling the Headlines
Introduction: Unprecedented Moves Grab Headlines
Recent outsized movements in the Japanese yen (JPY) and the Japanese bond markets have become the focal point of financial headlines. The prevailing narrative suggests that Japan is finally on the path to unwind its super easy monetary policy, causing yields to surge and the yen to strengthen. This phenomenon, rooted in simple and intuitive FX pricing theory, revolves around wide yield differentials and low volatility, making borrowing in JPY to buy USD an attractive proposition. However, as yield differentials narrow, the unwinding of this "carry trade" leads to a stronger JPY.
Understanding Yield Differentials: A Global Bond Rally
One might question why yield differentials are narrowing. Contrary to assumptions, the Bank of Japan (BoJ) is not the sole driver. Globally, bonds have experienced increased demand since October, with a substantial decline in the blue line from 350 basis points to 270 basis points, primarily attributed to U.S. Treasuries rather than Japanese bonds. At the current level of yield differentials, USDJPY should theoretically be at 140. In July, the 10-year yield differential between Japan and the U.S. was 280 basis points, and USDJPY stood at 138. Presently, with a lower yield differential of 270 basis points, USDJPY has surprisingly risen to 144.
Crude Oil's Impact on JPY: A Global Macro Driver
Another crucial factor influencing JPY's price action is the dramatic movement in crude oil prices. As Japan is a net importer of crude oil and the U.S. a net exporter, a rapid decline in oil prices prompts USDJPY to decrease. The yen appreciates as the terms of trade for Japan become more favorable in the wake of declining oil prices. In essence, the yen is adjusting to international macroeconomic fundamentals rather than responding to domestic factors or an imminent risk of a hawkish shift by the BoJ.
Considering Global Macroeconomic Scenario: BoJ's Dilemma
Contemplating a hypothetical scenario, if the Bank of Japan were to tighten its policy after over 20 years of near-zero interest rates and quantitative easing, global inflationary pressures continuing to subsidize could present challenges. A rapid strengthening of the yen could thwart Japanese inflation and wage aspirations from settling at the targeted 2%, reigniting a deflationary mindset.
Recap: Unraveling the JPY Rally
In summary, the rally in the JPY, despite the absence of services inflation and wage growth justifying a BoJ hawkish shift, can be attributed to two primary factors. Firstly, a global bond rally compressing yield differentials and secondly, collapsing oil prices benefiting Japan as a net importer. The puzzle's final piece involves contemplating the potential impact of these Japanese developments on global bond markets.
Japan's Role as a Capital Exporter: Impact on Global Bond Markets
Japan, as a massive exporter of capital, has Japanese investors holding trillions of dollars in foreign assets, particularly significant in Treasury markets. Although absent from Treasury markets since late 2021 and actively selling bonds in 2022, recent trends indicate a return to buying Treasuries. This raises questions about the driving forces behind Japanese investors' renewed interest in Treasuries.
FX Risks and Treasury Yields: The Japanese Perspective
Japanese investors engaging in foreign bond purchases face inherent FX risks. The process of converting JPY into USD to buy bonds and subsequently reverting the FX transaction means that USDJPY fluctuations significantly impact the profit and loss (P&L) of their bond transactions. Hence, Japanese investors approach Treasury yields differently, as demonstrated by the orange line depicting 10-year Treasury yields through the eyes of a Japanese investor. This perspective includes a 12-month hedge against USDJPY risk to manage FX exposure over a reasonable period.
Conclusion: A Multifaceted Journey of the JPY
In conclusion, the recent surge in the JPY and Japanese bond markets unravels as a multifaceted journey driven by global dynamics, oil prices, and Japan's role as a capital exporter. While headlines may hint at a simplistic narrative of BoJ actions and monetary policy shifts, a closer look reveals a complex interplay of factors shaping the trajectory of the Japanese yen and its impact on global financial markets.
US Dollar Steadies as Market Awaits Economic Data, Yen SoftensIn early European trading, the US dollar steadied near a one-week high against a basket of currencies, holding at 103.559 on the Dollar Index. This stability follows a period of weakness in November, marked by traders anticipating significant rate cuts by the Federal Reserve in the coming year. However, recent actions have seen a shift in sentiment as investors scaled back on dovish expectations, waiting for crucial economic indicators this week, including job openings, ISM services activity data, and the highly anticipated nonfarm payrolls report on Friday.
Amid this anticipation, the Japanese yen experienced a slight dip against the dollar, trading at 147.08, influenced by concerns over inflation. Tokyo's Core CPI for November showed a decrease to 2.3%, down from October's 2.7% and below the expected 2.4%. The Bank of Japan remains cautious about tightening its monetary policy despite persistent inflation above the 2% target, citing the need for sustained wage growth for long-term inflation sustainability. The BoJ's upcoming meeting in mid-December will be closely watched for any potential policy shifts.
As for the US, focus is on the imminent release of the ISM Services PMI, being for November hovering around 52.7 after October's decline to 51.8. Meanwhile, technical analysis for USD/JPY indicates resistance levels at 148.77 and 147.72, with support at 146.48 and 145.96
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What Next For The Yen?In Karate, offense is the best form of defence. The BoJ knows it. Japan faces a raft of economic headwinds which shows up in Yen’s performance.
The BoJ intervened strongly last year to support the currency when it skirted around current levels. Yen is hovering at those levels again. BoJ is anticipated to act. Such interventions typically mark the bottom.
This paper explores recent economic data to analyse the potential for monetary policy changes by BOJ.
JAPANESE MACROECONOMIC CONDITIONS HAMPER YEN FROM STRENGTHENING
Starting September, the Yen has trended lower relative to the USD among currency majors.
The Yen has weakened the most. As described previously , BoJ’s aims to kickstart the economy onto a high growth trajectory to exit decades of painful deflation.
Recent macroeconomic data indicates weakness. This reaffirms the need for continued loose monetary policy. However, a frail Yen poses a different type of challenge for the BoJ with higher import costs for fresh food and fuel.
This leaves the BoJ in a predicament between loose monetary policy and intervention to support the Yen. What does recent inflation, GDP, and wage data point to?
Inflation
Inflation declined M-o-M in September. CPI cooled to 2.8% falling below 3% for the first time in a year. Importantly, Japan’s producer prices are now below 2% in a sign that inflation might have peaked.
Consumer prices will fail to prevail above 4% for long with input prices moderating. The BoJ expects inflation to persist until March next year at current levels and to cool towards target rates in the following 12 months.
GDP Growth
The Japanese economy shrank 2.1% YoY in Q3. This is far below expectations of 0.6% decline and a sharp slowdown from +4.5% growth in Q2. Slow economic growth makes economic stimulus essential to sustain it.
Wages
Nominal wage growth continues to decline. Real wages are even more concerning. Wages have declined for the last 18 months when adjusted for inflation.
Next Shunto negotiations are set to complete by mid-Jan 2024 with outcome remaining uncertain. The BoJ highlighted that wage uncertainties and price-setting behaviour pose upside risk to prices.
Meanwhile, high inflation will keep impacting real wages, affecting people's ability to spend.
THE BANK OF JAPAN IS STUCK BETWEEN A ROCK AND A HARD PLACE
At the October monetary policy meeting, the BoJ announced changes to the bond yield cap. The Yield Curve Control (YCC) policy and range were kept unchanged.
However, a small modification was made to change the 1% JGB yield cap from a rigid one to a loose reference. These changes hint at BoJ setting itself up for the eventual roll-back of the YCC policy altogether.
Next BoJ policy meeting is set for December 19th. The BoJ will likely maintain stimulus and hold rates low amid feeble consumer & business spending.
The policy change will be through YCC dismantling, impacting the JGB market. It will require careful planning and deft timing.
Meanwhile, the BoJ may intervene to stem continued Yen weakness. The officials have expressed this sentiment over the last two weeks via warnings for participants shorting the Yen over the past two weeks.
Japan’s Ministry of Finance (MoF) intervened three times last year, injecting USD 68 billion to support the Yen when it was trading near 150/USD. These interventions, unannounced, led to sharp and unexpected currency moves.
Unlike previous exchange rate-based interventions, the BoJ’s current predicament revolves around volatility and public perception.
Reuters reports that if Japan aims to prevent yen appreciation, the MoF will issue short-term bills to raise Yen, which is then sold in the market to weaken the currency. Alternatively, to curb Yen depreciation, authorities will tap into Japan's FX reserves, exchanging dollars for the Yen.
In recent weeks, Japanese authorities have issued warnings and expressed readiness to intervene as the Yen continues to weaken, despite a moderating USD.
Masato Kanda, Japan's top currency official, emphasized the urgency of their judgments and the potential for intervention, resonating with rhetorics used a year ago.
MIXED SIGNALS FROM CURRENCY DERIVATIVES MARKETS
Although asset managers are not positioned as net short as they were in late-September, they increased their net short positioning (weakening Yen) last Tuesday. Similarly, leveraged funds also increased net short positioning sharply last week.
Options markets contrarily signal strength in the Yen. P/C ratio for CME Japanese Yen Options (JPU) is 0.42 implying two puts for every five calls. JPUs are quoted with the Yen as the base currency so call options express a view of the Yen strengthening.
Moreover, bullish bets have increased heavily over the past week. Specifically, nearest monthly and weekly contracts (JPZ3 and WJ4X3) show Yen strengthening in the near term. Bullish bets in December options outnumber bearish bets by three times.
Although put open interest (OI) is concentrated near current levels with the highest OI at 0.0066 (151 in USD/JPY), call OI is more spread across with a large OI at strike of 0.0069 (145 in USD/JPY) which has ballooned over the last week. This signals that options market expects Yen strengthening by next month.
Finally, implied volatility on JPU is near its lowest level since March 2022.
Source: CME CVOL
Options skew on JPU is close to one, indicating that premiums on calls and puts are equally priced. Convexity remains elevated signalling investor interest in OTM options suggesting likelihood of sharp moves ahead.
HYPOTHETICAL TRADE SETUP
Given 12-month low implied volatility, a position in JPU can yield cost-effective protection against sharp Yen moves.
Alternatively, with the anticipated stability in Japanese interest rates, a short futures position in CME Japanese Yen futures, as previously discussed in a paper , is a viable approach to capitalizing on Yen's expected weakening. We can tap into JPU to safeguard this position against unforeseen risks of yen strengthening from BoJ intervention.
Furthermore, CME offers weekly options for Japanese Yen futures, expiring from Monday through Friday of the week. This enables investors to attain short-term exposure on a more focused scale, accompanied by lower premiums compared to monthly options.
A long call option position in JPUZ3 (expiring on December 8) would benefit from a BoJ intervention.
The trade setup consists of an entry at a strike of 0.0068 (JPY 147.0588) in JPUZ3 call options. These options are at a delta of 25 and expire in 30 days providing a good trade-off between low premium and adequate exposure to the underlying.
As of settlement on November 17th, premium for these options stood at USD 245 at an implied volatility of 8.26%.
Source: CME Options Calculator
The position breaks even at 0.00682 (JPY 146.6275) and turns profitable when (a) underlying futures price increases above strike price, and/or (b) implied volatility increases.
Source: CME QuikStrike
MARKET DATA
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USDJPY: Trendline breakout, wait for retestLooks like USDJPY has broken down through the rising trendline, there was a slight recovery at the backend of Friday, this indicates we could see a short retracement from here to test the trendline break, and then down.
The Yen performed well at the start of Friday, I don't believe this was BoJ intervention, as they have said that they expect the fundamentals to play out - we'll see, bad data from JPY this week may necessitate intervention, however good data on Friday (PMI) will I think be enough to start the recovery process for the Yen.
If Japan looks like it's going to have a soft landing then I think markets will reward the Yen with a more positive sentiment and this could mean we get a lot of good action for these crosses.
I think the USD is done being bullish for now (even the hawkish speakers cannot convince the markets), so either way I think we'll see this pair fall, so monitoring LTF's for a suitable entry / rejection from the retest point.
A break below 148.5 will see a more sustained move to the downside, imho.
USD/JPY slips on soft US inflationThe Japanese yen has rebounded on Tuesday with strong gains. In the North American session, USD/JPY is trading at 150.70, down 0.67%.
The yen has snapped a nasty six-day losing streak which saw the currency lose 1.5%. The US dollar is broadly lower today after the October inflation report was weaker than expected.
US inflation was softer than expected in October. Headline CPI eased to 3.2% in October, down from 3.7% in September and August and lower than the market consensus of 3.3%. Much of the downswing can be attributed to lower gasoline prices. On a monthly basis, headline CPI was unchanged, compared to a 0.4% gain in September and a market consensus of 0.1%.
The core rate, which excludes food and energy prices, showed a more moderate decline. Core CPI fell from 4.1% to 4.0%, shy of the market consensus of 4.1%. Monthly, core CPI dropped from 0.3% to 0.2%, below the market consensus of 0.3%.
The markets have responded to the soft inflation print by repricing in a pause in December at 94%, compared to 85% a day earlier.
Japan's GDP is expected to have contracted in the third quarter, with a consensus of -0.4% y/y. This would be a huge downturn from the 4.8% gain in the second quarter and could have significant ramifications on monetary policy.
If the economy experienced negative growth as expected, the Bank of Japan will find support for its argument that the economy is too fragile to exit negative interest rates. There has been growing speculation that the central bank will tighten policy in the near term due to persistently high inflation and signs of wage growth. A weak GDP print will provide the BoJ with a reason to continue its ultra-loose policy until there is evidence that growth is strengthening.
USD/JPY pushed below support at 151.61 and is testing support at 150.82
There is support at 150.05 and 149.29
AUDJPY: Interesting zone, continue up or Double top reversal?We're at the top end of the range for this pair, I am expecting BoJ to start backing its currency.
I've recently noticed some negative correlation between USDJPY and the other XXXJPY crosses, so where USDJPY falls the others have been more bullish.
That said if the BoJ get involved it will tank all of them.
I'm not 100% what I really think will happen here, I think the Friday pinbar suggests there's more upward momentum, but will be very cautious if I trade as anything against the Yen (@which is staggeringly weak against everything).
I'm opting for a move up and would keep a tight and chasing SL in place.
YEN WATCH! 🧐Summary
The Yen continues to weaken. The USDJPY is now at a 25-year high.
The Details
The Bank of Japan (BOJ) intervention could happen any week, meaning some big moves on JPY pairs. I am expecting at least a 500 pip bearish move on USDJPY 💥
If there is no intervention, USDJPY may reach as high as 155-160 before the BOJ changes interest rates to strengthen the Yen.
The JPY is weak across the board, especially against the FOREXCOM:CNHJPY PEPPERSTONE:CHFJPY and PEPPERSTONE:SGDJPY
Things to Consider
Don't over-leverage JPY long positions due to your FOMO
Think longer-term. The intervention move could provide only temporary strength for the Yen. The BOJ may need to hike rates before the Yen forms its lows. An interest rate hike may not happen until Q1/Q2 2024.
USDJPY: Shorting NowNot sure if this is the big short or not yet, but looking at price action it's been a jog up to this point, rather than a sprint, this tells me we're fine to short until at least the ascending dynamic trendline that reversed the last short.
We have an engulfing candle on the 1 hour, followed by a long-body doji, so I think we're going to see a push down.
If we go below then that's my reversal sign for bigger lots.
The problem is history tells us BoJ will intervene, this type of knowledge can force people to get in big too soon.
Let's see what happens from here, SL above the last high.
USDJPY: Still waiting for BoJ InterventionI don't believe the BoJ have gotten involved yet, or if they have it's going under the radar.
I believe this pair has only slipped due to USD retracement following the NFP and softer labour market data last week.
With retailers now net short I think that we'll see another push back up. We have broken my rising wedge line related idea, however unless we break below 1.487 then we're still in the uptrend.
I now see it as unlikely we'll get to 154 and the BoJ intervention will surely come if necessary (it may not need to if USD keeps falling).
Overall no confirmation of reversal so I'm long again when I et the LTF signal, but setting 151.65 as the target with tight SL (and will keep moving it up) as I don't want to get caught in a buy up here.
Let's see what this week brings.
The Bank of Japan can’t let goThis week financial markets were dominated by central banks policy decisions. While the Federal Reserve (Fed) and Bank of England (BOE) kept rates on hold, the policy board of the Bank of Japan (BOJ) decided to further increase the flexibility in its yield curve control policy.
The BOJ previously set a strict cap of 1.0% for the 10-year Japanese Government Bond (JGB) yield. But it has now decided that 1% should be a “reference” (not a strict cap), which effectively allows the yield to rise above 1% when the BOJ thinks it is appropriate. The upper bound of 1% appears to be a level they can’t let go of. By doing so, the BOJ is choosing an exit path that gives them the maximum flexibility but minimum volatility around the Yen. We view this as a dovish move as consensus expectations were for the BOJ to move the cap to 1.25% rather than 1%.
Japan’s remains on a narrow path
One of the reasons holding back the BOJ from normalisation of policy rates, is they still believe Japan’s recovery since the re-opening in October 2022 remains on a narrow path as it relies heavily on tourism, while the broader services sectors have yet to pick up significantly and manufacturing activity has been hampered by soft exports. Japan’s flash PMI readings for October showed us a bifurcated economy where the services sector is stronger than the manufacturing sector. Manufacturing PMI clocked in at 47.6, which is in contraction territory. Services PMI was 51.1, which is down from last month’s reading of 53.8 but is still in expansion territory, no doubt helped by fiscal stimulus and the accommodative monetary policy environment.
BOJ on the lookout for an intensified virtuous cycle between wages and prices
BOJ governor Ueda indicated that the BoJ will be monitoring the upcoming spring union-employer wage negotiations. A strong outcome could catalyse the earlier attainment of sustained inflation in Japan, but overall, Japan’s recovery isn’t strong enough yet for employers, especially small enterprises, to meaningful support wage hikes in the broad economy. While headline inflation bolted north of 4% in January 2023, it appears to have peaked and has begun receding. While core inflation remains around the 4% mark. The Producer Price Index (PPI) slowed to 2% annually in September suggesting a stabilization or even drop in CPI ahead.
The BOJ revised its outlook for core inflation (all items less fresh food and energy) to 3.8% in FY23, 1.9% for FY24 and 1.9% for FY25. The BoJ stated that the inflation uptick “needs to be accompanied by an intensified virtuous cycle between wages and prices”.
The Yen is unlikely to appreciate under BOJ’s policy change owing to the large gap in interest rates between the US and Japan. The direction of the Yen matters for Japanese equities owing to Japan high export tilt. The exporters stand to benefit amidst a weaker Yen.
Fire power abounds for Japanese equities
Japanese equities had a strong first half in 2023, attaining 33-year highs. Yet valuations at 15.7x price to earnings ratio (P/E), still trade at a 30% discount to its 15-year average providing room to catch up. More importantly, earnings revision estimates in Japan are currently the highest among the major economies. Earnings yield at 4.07% for the Nikkei 225 Index has been trending above bond yields 0.947% for 10 Year JGBs , keeping the well-known TINA (There is no Alternative) trade alive in favour of Japanese equities.
Tailwind from corporate governance reforms
Tokyo Stock Exchange’s (TSE) call for listed companies to focus on achieving sustainable growth and enhancing corporate value is beginning to bear fruit. The call was aimed at companies with a price to book (P/B) ratio below one. Those companies were asked to develop a plan for improvement, disclose and then implement and track its progress. The progress has been encouraging with 31% of companies on the prime market making a disclosure of their plan .
Large companies with a price to book ratio below one have been more proactive with disclosure. Historically cash-heavy Japanese companies face increasing pressure to improve their numbers, possibly by funnelling historically high excess cash reserves into increased buybacks or dividends.
Conclusion
Inflation has been missing in Japan for more than a decade. So now that it has arrived aided by the post pandemic pick up of the Japanese economy, policy makers are not in a rush to obliterate it. With wage growth lagging behind inflation, the Bank of Japan does not appear ready to wean itself from Yield Curve Control until a more intensified virtuous cycle is observed between wages and prices. The BOJ’s policy decision this week is unlikely to allow the appreciation of the Yen, which should continue to provide a competitive advantage to Japanese exporters.
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Boy that was a week!What a week that was! The dance around 150 certainly didn't disappoint. After the break and failure the week prior which continued on Monday, I thought that was it, that price gave it a good shot but ultimately failed, and would perhaps settle below.
To nobodies surprise then when the BoJ held rates at -0.10% that we made almost a straight line move back above the once solid wall. So severe was the buying, I wouldn't have blamed anybody buying dips on Wednesday.
The top was just over 151.700, and despite a small bounce on Thursday lunch, we spent the rest of the week grinding back towards 150. I don't think the Fed decision can really be to blame, it seemed almost certain we'd get a pause, in fact the market mostly agreed in the minutes after the release with a very muted reaction.
Today's jobs numbers was a different story, seeing an 80 pip decline. The past 3 days have almost all but wiped out the BoJ fuelled push giving us a messy looking Daily chart which is no longer respecting the uptrend nor 150 in any meaningful capacity.
Heading into next week i'll be watching to see where price settles. Give everybody the weekend to digest what happened and follow the price action Mon/Tue and let that inform an entry.
Hope you all had a great trading week, and I'll see you in a couple days.
EURJPY H4 | Bullish momentum to extend?EUR/JPY is falling towards a pullback support and could potentially bounce off this level to climb higher.
Buy entry is at 159.764 which is a pullback support that aligns close to the 38.2% Fibonacci retracement level.
Stop loss is at 159.281 which is a level that aligns with the 50.0% Fibonacci retracement level.
Take profit is at 160.847 which is a swing-high resistance.
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USD/JPY: Anticipating Downward Movement at Strong ResistanceUSD/JPY is one of the most traded currency pairs in the world. The value of the USD/JPY pair is quoted in Japanese yen per one U.S. dollar. For traders, it is important to note that the pair is currently at a strong resistance level and is expected to move downwards.
Outlook
According to, the USD/JPY pair is expected to face resistance at the 151.70 area, which is its highest level since October 2022. The YTD peak could also offer some resistance to the USD/JPY pair ahead of the multi-decade top. The Bank of Japan's policy of patience sent the yen to an all-time low, and the Japanese authorities are always in close communication with U.S. counterparts on currencies and share a mutual understanding that excessive moves in the currency should be avoided. Therefore, traders should keep an eye on the pace of the decline in the Japanese yen.
Fundamental Analysis
The unwavering stance on negative rates by the Bank of Japan puts a spotlight on USD/JPY movements, amid whispers of potential interventions. The interest rate differential between the policy rates of the Federal Reserve and the Bank of Japan (BoJ) is an important influence on the USD/JPY exchange rate. Higher interest rates make a currency relatively more attractive because they allow for higher returns on investment.
Technical Analysis
The USD/JPY pair is currently at a key resistance level of 151.93. A firm break above this level will target 100% projection of 129.62 to 145.06 from 137.22 at 152.66. However, for the shift to lead to a bullish trend, the price must start making higher highs and lows. That means a break above the 150.75 resistance level. Otherwise, the price might start a period of consolidation near the 150.00 key level.
Conclusion
In conclusion, the USD/JPY pair is currently at a strong resistance level and is expected to move downwards. Traders should keep an eye on the pace of the decline in the Japanese yen. The interest rate differential between the policy rates of the Federal Reserve and the Bank of Japan (BoJ) is an important influence on the USD/JPY exchange rate.
USDJPY H4 | Falling to Fibo confluence supportUSDJPY is falling towards a pullback support and could potentially bounce off this level to rise towards our take-profit target.
Entry: 150.433
Why we like it:
There is a pullback support that aligns with a confluence of Fibonacci levels i.e. the 38.2% retracement and the 61.8% projection levels
Stop Loss: 149.740
Why we like it:
There is a level that aligns with the 100.0% Fibonacci projection level (keeping a relatively tight Stop Loss due to potential intervention measures by the BoJ)
Take Profit: 151.703
Why we like it:
There is a swing-high resistance level
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Yen Weakens against Dollar as BOJ Adjusts Monetary PolicyThe Japanese yen weakened beyond 151 against the mighty dollar, thanks to the Bank of Japan's (BOJ) recent adjustments to its monetary policy.
The winds of change are blowing in our favor, and it's time to seize this moment and take action! By going long on USDJPY, we can potentially capitalize on this favorable market trend and secure significant gains. The BOJ's limited adjustments to their monetary policy have created a fertile ground for us to explore and maximize our profits.
Why should you consider going long on USDJPY, you ask? Well, let me break it down for you:
1. BOJ's Monetary Policy Adjustments: The BOJ's recent tweaks to their monetary policy indicate a shift towards a more accommodative stance, which typically leads to a weaker yen. With the yen already breaching the 151 mark against the dollar, this provides an excellent opportunity to ride the wave of yen depreciation.
2. Favorable Dollar Strength: The US dollar has been flexing its muscles lately, exhibiting strength against various major currencies. By pairing it with the weakened yen, we have a powerful combination that can potentially amplify our gains.
3. Potential for Increased Volatility: As the yen weakens and the market reacts to the BOJ's policy adjustments, we can expect increased volatility in the USDJPY pair. For experienced traders like us, volatility often translates into profitable opportunities.
Now, it's time for action! Take advantage of this exciting market development and consider going long on USDJPY. Remember, the key to success lies in seizing opportunities when they arise, and this is undoubtedly one of those moments.
As always, remember to conduct thorough research, employ proper risk management strategies, and consult with your trusted financial advisor or broker before making any trading decisions.
Wishing you fruitful trades and a prosperous journey in the forex market!
Ready to ride the wave of yen depreciation? Don't miss out on this incredible opportunity! Take action now and go long on USDJPY to potentially maximize your profits. Remember, the forex market waits for no one, so seize the moment and make your move today!
Heavy Dollar news day tomorrowWhat an insane session for USDJPY! We know the ExMo is low due to the compression we've seen, but even compared to more normalised figure, what we've seen today has broken all expectations.
There are two questions going forward. The most immediate is the Dollar news we have scheduled for Nov 1st. Those being ADP at 12:15pm London (due to daylight savings) followed by the Fed rate decision at 6pm. The second is whether or not the BoJ have any other tools to alleviate the Yen weakness other than simply intervening like we've seen before.
Let's tackle the new first. I wouldn't expect ADP to cause much of a stir given the Fed decision always overshadows anything else, and if the Fed holds at 5.50%, then I wouldn't expect anything other than a small bump. Given the move we've seen today I think some form of relax to happen, possibly with a slight downward trajectory for profit taking....possibly we just slide a little lower into the end of the week?
As for the BoJ, I'm nervous above 150.
I'll take it a day at a time above here and be mindful of any macro factors that change the longer term outlook for either the Dollar or Yen. But it seems like the only mechanism Japan has to stop the devaluation is to inject a whole bunch of money into buying the Yen.
Be careful out there and I'll see you tomorrow.
ZARJPY: My Bearish Speculation Against The JPY Carry TradeWe have some Bearish Divergence on the ZARJPY, but the main reason I entered this trade was to speculate against the JPY Carry Trade and front-run the potential flight we may get back to the Yen if Japanese Yields were suddenly to go up or even become uncapped during the BoJ meeting tonight.
I could have shorted EURJPY, GBPJPY, AUDJPY, or USDJPY instead, but I feel ZARJPY may give a more violent reaction as it is a currency that has generated some of the highest yields vs the JPY thus far, and if that yield were threatened, I think it would move down quite fast compared to the other pairs.
I guess as a side note: This might end up being a Bearish 5-0 in the long run.
USD/JPY holds below 150 ahead of BoJ meetingThe Japanese yen is drifting on Monday after pushing the US dollar back below 150 on Friday. In the European session, USD/JPY is trading at 149.71, up 0.05%.
The Bank of Japan holds its two-day meeting beginning on Monday and there's plenty of anticipation around the meeting. BoJ meetings were once dreary affairs that barely made the news, but that has changed in the era of high inflation.
The central bank has been an outlier with its ultra-loose monetary policy, insisting that inflation has been transient. The BoJ recently tweaked its yield curve control (YCC) program, widening the trading band for 10-year Japanese government bond yields to 1%, which sent the yen sharply higher.
There is pressure on the BoJ to again raise the trading band as yields have risen close to 0.90%. The surge in US Treasury yields has widened the US/Japan rate differential, which has weakened the yen. If the BoJ does not take any action at this meeting, the yen could weaken further, raising the risk of Tokyo intervening in the currency markets.
One move the BoJ is expected to take is to revise upwards its quarterly inflation forecasts. The latest Tokyo Core CPI reading rose from 2.5% to 2.7% y/y, an indication that underlying inflation remains sticky. If the BoJ does raise the inflation forecasts, it would signal a move toward monetary policy normalization, which could shore up the struggling yen.
The Federal Reserve has sounded hawkish about inflation and received support for its stance from Friday's core PCE price index, which rose 0.3% in September, up from 0.1% in August and the highest level in four months. There are some inflation risks heading into next year, but the markets have priced in pauses in the November and December meetings.
149.05 and 148.45 are providing support
There is resistance at 149.91 and 150.51
AUDJPY: Big week for JPY Yen this weekThere's talk of the BoJ lifting the limit on yields to 1.5% from 1% this week, which would be a very strong catalyst for the Yen to start showing some strength.
We can see that this pair does not have any direction at the moment, trading in a flag pattern, but I don't see this as either bullish or bearish at the moment.
I'm not sure how or when or if to trade this but monitoring, my idea is based on BoJ protecting its currency generally, I am seeing the Aussie getting stronger so think we'll go up before coming back down, let's see...