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USD/JPY 240 Minute Chart Analysis

USD/JPY in a Range after BOJ's steady stance on Interest Rates. Price hovering around the 148.200 level

The Bank of Japan (BOJ) has maintained its ultra-low interest rates and signaled a commitment to continue supporting the economy until it achieves its 2% inflation target on a sustainable basis. This decision suggests that the BOJ is not in a hurry to phase out its extensive stimulus program, keeping a close watch on inflation and monetary policy adjustments. In August, Japan’s inflation rose by 4.3% compared to the previous year, excluding fresh food, which indicates the BOJ’s efforts to prepare markets for potential policy shifts in the future.

While the central bank is considering changes to its monetary policy framework designed to combat deflation, most economists, according to a Reuters poll for September, predict that negative interest rates could come to an end in 2024. The anticipation of a rate hike has driven Japan’s 10-year government bond yield to a decade-high. Balancing the need to address rising prices and yields while maintaining an ultra-easy policy poses a challenge for the BOJ. The central bank will closely monitor economic conditions and adjust its policies accordingly, making investors and analysts attentive to any hints of a policy direction change.

Turning to the USD/JPY currency pair, it is currently trading at the 147.980 level. Notably, the price is trading above both the 50-day and 200-day moving averages, indicating a bullish range momentum in the market.

Scenario 1 suggests that the price may continue to rise, potentially retesting the 148.112 and 148.404 levels. If bullishness persists, further advancement could see the price testing the 148.650 level, corresponding to the top of resistance level 1. The highest resistance levels are at 148.913 and 149.100, representing significant barriers to further upside movement.

On the other hand, Scenario 2 proposes that the price could decline and test the 147.548 level. A successful test could lead to further downside movement towards the 147.231 level, with subsequent support levels at 146.934 and 146.650.

The central bank’s actions and statements will continue to be closely watched for any indications of a shift in policy direction.

Key Levels to watch are 148.035,148.404,148.913,149.824,147.231

Level 1147.550148.404
Level 2147.231148.913
Level 3146.934149.430