USD/JPY: THE BANK OF JAPAN RAISED INTEREST RATES FOR THE FIRST TIME SINCE 2007
| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | BUY STOP |
| Entry Point | 152.00 |
| Take Profit | 154.40 |
| Stop Loss | 151.00 |
| Key Levels | 148.30, 150.30, 152.00, 154.40 |
| Alternative scenario | |
|---|---|
| Recommendation | SELL STOP |
| Entry Point | 150.30 |
| Take Profit | 148.30 |
| Stop Loss | 151.00 |
| Key Levels | 148.30, 150.30, 152.00, 154.40 |
Current trend
During the Asian session, the USD/JPY pair is developing an upward momentum, formed against the Bank of Japan’s historic decision to abandon its eight-year policy of negative interest rates, and is preparing to overcome the historical mark of 151.86.
As expected, officials raised borrowing costs for the first time since 2007, from –0.10% to 0.10%, while maintaining most of the bond portfolio. The department abandoned only the riskiest exchange-traded funds (ETFs) and Japanese real estate funds (J-REITs) and plans to complete purchases of corporate bonds by the end of the year. However, if economic conditions worsen, the negative interest rate policy could be reinstated, monetary authorities said. Macroeconomic statistics put additional pressure on the yen: in January, industrial production fell by 6.7% after falling by 7.5% last month, which kept the figure at –1.5% YoY.
The American dollar is trading at 103.20 in USDX ahead of today’s US Fed interest rate meeting: according to forecasts, the figure will remain at 5.25–5.50%, and no change in bond repurchase parameters is expected. Investors focus on the subsequent press conference, during which the head of the regulator, Jerome Powell, may outline the timing of the transition to a “dovish” cycle. But even if this does not happen, the dollar has high prospects for stronger growth, which means that the USD/JPY pair will most likely break its all-time high.
Support and resistance
On the daily chart, the trading instrument is growing within the channel 154.00–148.30, forming an upward wave around the historical high of 151.50.
Technical indicators gave a buy signal: fast EMA on the Alligator indicator crossed the signal line upward, expanding the range of fluctuations, and the AO histogram forms ascending bars in the buy zone.
Resistance levels: 152.00, 154.40.
Support levels: 150.30, 148.30.
Trading tips
Long positions may be opened after the price rises and consolidates above 152.00, with the target at 154.40. Stop loss – 151.00. Implementation period: 7 days or more.
Short positions may be opened after the price declines and consolidates below 150.30, with the target at 148.30. Stop loss – 151.00.
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