Analysts at UBS expect that the Bank of Japan will soon reconsider a change in ultra-loose monetary policy, which they believe could send the USDJPY to 120 points, from the current 133.7 points:
- Analysts indicated that an adjustment in monetary policy would occur 'sooner rather than later,' but cited June or July, this year, as a more likely date;
- New BoJ Governor Kazuo Ueda will lead the central bank's meeting next week. Elevated inflation and drying up bond market liquidity are fueling speculation about a possible change in policy
- According to Bloomberg, BoJ officials are still cautious about changing or abandoning yield control stimulus and prefer to wait for progress toward stable inflation. This is also confirmed by Ueda's stance at the inaugural press conference;
- A Bloomberg survey of 47 economists showed that 41, (87% of them) expect no change at the upcoming meeting, confirming that any change in policy would be a huge surprise, creating downward pressure on USDJPY.
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Create account Try a demo Download mobile app Download mobile appThe 120-point level indicated by UBS runs around the 61.8% Fibonacci retracement of the upward wave initiated in 2020. The pair would first have to break out below the 50% abolition, near 127 points. Ahead of the BoJ's decision, USDJPY is still trading well above the nearest Fibo-determined support. Source: Bloomberg
USDJPY, D1 interval. The rolling averages SMA100 and SMA200 have formed a 'death cross' formation, which may suggest that the smallest resistance trend line is running downward. Source: xStation5
