USD/JPY Probes 135 as BOJ Implements YCC

USD/JPY ANALYSIS & TALKING POINTS

• BOJ bond shopping for and loans dominate Japanese headlines.
• How a lot impression will the FOMC minutes have?
• Technical evaluation signifies attainable draw back to come back by way of the rising wedge chart sample.

JAPANESE YEN FUNDAMENTAL BACKDROP

The Japanese Yen discovered some assist this Wednesday morning towards the US greenback whereas the Bank of Japan (BOJ) needed to buy 10-year authorities bonds as a result of yield breaching the BOJ’s higher restrict (0.5%) of their coverage band. This has been the second consecutive buying and selling session the place this has taken place and has introduced into query the BOJ’s ultra-loose financial coverage stance as soon as extra.

Earlier this morning, the Reuters Tankan Index for February (see financial calendar under) improved barely from the January learn; nonetheless, the unfavorable print does recommend worsening circumstances throughout the manufacturing sector. The BOJ’s Tamura adopted up with some blended messaging stating that free financial coverage is required at current however future coverage adjustments might be important at some point of the long run. He went on to quote the sustained menace of inflationary pressures in Japan in addition to elevated wages as a serious contributor from the companies sector. The above may present a hawkish slant to the BOJ’s upcoming assembly leaving room for JPY assist.

JPY ECONOMIC CALENDAR

Source: DailyFX financial calendar

From a USD perspective, the spotlight for immediately comes by way of the FOMC minutes and markets will doubtless concentrate on board members who most well-liked a bigger rate of interest hike. The dollar might not react extraordinarily favorably contemplating the latest rally which has proven indicators of exhaustion. On one other be aware, geopolitical tensions with US/China and Russia/Ukraine continues to offer sustenance by way of the USD’s safe-haven attraction.

USD/JPY TECHNICAL ANALYSIS

USD/JPY DAILY CHART

Chart ready by Warren Venketas, IG

Daily USD/JPY worth motion continues to commerce throughout the rising wedge chart sample (black) hovering across the psychological 135.00 deal with. Looking on the Relative Strength Index (RSI), there’s nonetheless room for additional upside and a breach above wedge resistance may invalidate the sample. Bears might be in search of a break and affirmation shut under wedge assist exposing the 133.63 assist stage.

Key resistance ranges:

• 137.67
• 200-day SMA (blue)
• 135.00

Key assist ranges:

IG CLIENT SENTIMENT BULLISH

IGCS exhibits retail merchants are at present web quick on USD/JPY, with 60% of merchants at present holding quick positions (as of this writing). At DailyFX we take a contrarian view on sentiment leading to a short-term upside bias.

Contact and observeWarrenon Twitter:@WVenketas