The Bank of Japan has kept its policy rate at -0.10%. Namely, the BoJ is not going to use interest rates as a tool.
Meanwhile, the central bank has re-defined its 10-year bond yield 1.00% target from a rigid limit to a reference. The BoJ could allow the rate to reach above the 1.00% mark. In theory, the redefining should have caused a strengthening of the Japanese Yen. Namely, higher bond rates would mean more demand for the JPY that would in turn strengthen the currency.
Despite the redefinition, the board announced details that caused a drop of the Yen. Namely, the BoJ revised its inflation forecasts for 2023, 2024 and 2025. In general, the board of the bank pledged to remain patient in their policy and inflation would not drop back below 2.00% until 2025. If compared to US and European announcements of 2.00% inflation in 2024, the news indicate that the Bank of Japan will do less tightening than its counterparts.
Economic Calendar
The US central bank, The Federal Reserve is scheduled to make a rate announcement on Wednesday at 18:00 GMT. The Fed is expected to keep interest rates unchanged at 5.50%.
Afterwards, note the 18:30 GMT press conference of the Chairman of the Federal Reserve Jerome Powel. His comments always cause major volatility and quite often reverse the initial market reaction to the publication of the USD base interest rate.
Hourly Chart
USD/JPY daily chart's review
On the daily candle chart, the rate has additional support from the ascending 50-day simple moving average, which has reached above 148.50. Meanwhile, note the marked 2022 high level at 152.00.Daily chart
Read More: Technical Analysis
Traders are shorting
Since Friday, traders were bearish on USD/JPY, as 53% of open positions on the Swiss Foreign Exchange were short.
Meanwhile, on Tuesday, trader pending orders in the 100-point range around the current exchange rate were 77% to sell.