BoJ

USDJPY Forecast: the anticipation of a tighter monetary policy at the next BOJ meeting has dominated oversold pressures on the USDJPY. Is there a reversal on the horizon?

Harris replacing Biden may not be a radical overhaul where policies are concerned, but it has certainly brought the Democrat’s prospects for maintaining power back from the brink of death. From a market perspective, it means Trump is no longer a ‘walk in’ President, and political headlines from the US are no longer driving sentiment for now. Thankfully, we have intertest rate decisions from the FOMC, BOE and BOJ to drive sentiment, along with NFP and Australia’s CPI report for good measure.

USDJPY Forecast: The US Dollar index steadies above 104 given an uncertain political atmosphere, but the USDJPY dips back near monthly lows amid monetary tightening expectations.

USDJPY Forecast: With the market fully pricing in a Fed rate cut starting in September, along with increasing speculations over a BOJ rate hike at the end of July, the USD/JPY is experiencing a sharp decline.

Despite rising expectations for a BOJ rate hike, the faster pace of Fed policies is set to drive greater volatility in the USDJPY chart.

Some traders view Kanda’s “lame duck” status as a sign that Japanese policymakers may not intervene until USD/JPY reaches closer to 165.

Only intervention from the Bank of Japan (BOJ) or a dramatic increase in Fed rate cut bets look to be standing between USD/JPY and a test of the multi-decade highs struck in late April, unless the People’s Bank of China (PBOC) moves aggressively to curb weakness.

Traders are clearly keeping a close eye on the 158 handle after USD/JPY spiked up to it. Note that we're yet to see a daily close above 158 since late April, which landed one day before the MOF first intervened this year.

Japanese officials had been warning for months that speculative moves in the Japanese yen would not be tolerated without elaborating on what exactly constituted a ‘speculative’ move. We may have just been provided the answer.

It was supposed to be a quiet day with Japan on a public holiday. Yet the initial rally to 160 may have irked central authorities enough to ditch their supposed day off, intervene and send USD/JPY 400-pips lower.

If Japan’s Ministry of Finance (MOF) was looking for a trigger to instruct the Bank of Japan (BOJ) to intervene in currency markets, they were just provided a big one. Expect heightened near-term volatility in USD/JPY on Monday.

155 has become the latest 'glass ceiling' for the rapid rise of USD/JPY. And with a key US inflation report, BOJ meeting and potential for risk-off sentiment next week, this key level could be tested and prompt a response from Japan's central authorities.

For USD/JPY, the next test to watch will be at 155.00, and if the MOF/BOJ fail to act if USD/JPY breaches that level, traders may start to turn their eyes up to 160.00 next

Whether you look at fundamentals or technicals, the case for USD/JPY is compelling. But the threat of BOJ intervention has not gone away, making for a tricky environment for traders to navigate. However, the volatility it generates creates multiple trade setups depending on your preferred timeframe.

AUD/JPY and EUR/JPY are sandwiched between range highs and uptrend support, meaning traders should be on alert for potential bearish and bullish breakout this week with big event risk in the United States and Europe approaching fast.

USD/JPY sits in a narrow trading range, sandwiched by bullish fundamentals and threat of intervention from the Bank of Japan to support the yen. The latter has reduced the odds of near-term upside for USD/JPY despite the release of important inflation updates in the United States this week.

With the threat of BOJ intervention elevated and seemingly increasing, buying USD/JPY right now screens as high risk and low reward. Selling rallies ahead of 152 looks a far stronger trade setup, especially when you consider how significant the US rates repricing has already been this year.