USD/JPY Defends Rebound from Monthly Low Ahead of BoJ Rate Decision
USD/JPY seems to be defending the rebound from the monthly low (139.89) as it attempts to retrace the decline from the start of the week.
Share this:
Japanese Yen Outlook: USD/JPY
USD/JPY seems to be defending the rebound from the monthly low (139.89) as it attempts to retrace the decline from the start of the week, and the Bank of Japan (BoJ) interest rate decision may keep the exchange rate afloat as the central bank is expected to retain the current policy.
USD/JPY Defends Rebound from Monthly Low Ahead of BoJ Rate Decision
Keep in mind, USD/JPY bounced back ahead of the 2024 low (139.58) to pull the Relative Strength Index (RSI) above 30, and the exchange rate may stage a larger recovery as the BoJ remains reluctant to pursue a rate-hike cycle.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
Looking ahead, the BoJ is anticipated to keep interest rates on hold as the central bank insists that ‘in the second half of the projection period of the January 2025 Outlook for Economic Activity and Prices, underlying CPI inflation is likely to be at a level that is generally consistent with the price stability target.’
Japan Economic Calendar
In turn, more of the same from the BoJ may drag on the Japanese Yen as the central bank sticks to a wait-and-see approach, but USD/JPY may struggle to retain the rebound from the monthly low (139.89) should Governor Kazuo Ueda and Co. show a greater willingness to further normalize monetary policy.
With that said, swings in the carry trade may sway USD/JPY amid the diverging paths between the BoJ and Federal Reserve, but the exchange rate may further retrace the decline from the start of the month should it continue to hold above the 2024 low (139.58).
USD/JPY Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/JPY on TradingView
- USD/JPY holds above the 2024 low (139.58) amid the failed attempts to close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone, with a move/close above the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) region bringing the 50-Day SMA (147.22) on the radar.
- Next area of interest comes in around 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension), but USD/JPY may continue to track the negative slope in the moving average as long as it holds below the indicator.
- As a result, USD/JPY may stage further attempts to test the 2024 low (139.58), with a close below the 140.50 (61.8% Fibonacci retracement) to 141.50 (38.2% Fibonacci extension) zone bringing the July 2023 low (137.24) on the radar.
Additional Market Outlooks
British Pound Forecast: GBP/USD on Cusp of Testing 2024 High
Euro Forecast: EUR/USD Defends Weekly Low Ahead of Euro Area GDP Report
AUD/USD V-Shape Recovery Stalls Ahead of December High
Gold Price Coils Above 50-Day SMA
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY and EUR/JPY: Diverging Setups Ahead of ECB and BOJ
USD/JPY stalls at resistance as EUR/JPY forms a falling wedge. Fed, ECB and BOJ rate expectations could determine the yen's next move.
USD/JPY Weekly Outlook: AI earnings could overshadow the Fed and BoJ
AI sentiment has become a major driver of US Treasury yields and USD/JPY. With Microsoft, Alphabet and Amazon reporting this week, central bank decisions may have competition for traders' attention.
EUR/JPY Hits Its Most Oversold Since 2024 on French Debt
USD/JPY technical analysis shows an intact long-term uptrend, while EUR/JPY sits at oversold extremes last seen in 2024 on French debt uncertainty.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.