In the latest development, the USD/JPY currency pair has shifted lower following a submission by BoJ Governor to a government panel. The document reiterated the BoJ’s stance on raising interest rates if the economy and prices align with their expectations, according to OCBC FX strategists Frances Cheung and Christopher Wong.
The Possibility of Sideways Trading
According to Cheung and Wong, potential policy shifts between the Fed and BoJ could lead to a narrowing of UST-JGB yield differentials, influencing the overall direction of USD/JPY towards the downside. Additionally, a sell-off in equities, indicating a pullback in risk appetite, has also contributed to the decline in USD/JPY.
As of the latest data, the pair is trading at 145.20. The bullish momentum on the daily chart remains intact, with a moderated decline in RSI. It is anticipated that the pair may enter a phase of sideways trading. Key resistance levels include 146.10 (21 DMA) and 147.20 (recent high), while support levels are identified at 144.40 and 143.45 (recent low).
Analysis and Implications
For those involved in trading or investing in the USD/JPY currency pair, the recent statements by the BoJ Governor and potential policy shifts between central banks could have significant implications. It is important to monitor key resistance and support levels, as well as factors such as UST-JGB yield differentials and equity market movements, to make informed decisions.
Ultimately, understanding the dynamics of the currency market and staying informed about central bank policies can help individuals navigate the fluctuations in the USD/JPY pair and optimize their financial strategies.