The next two days will bring interest rate decisions and central bank conferences from the Bank of Japan and the Federal Reserve.
USDJPY – Daily Chart
USDJPY sits at an important level that created an August high and November support. A move lower or higher could mark a medium-term trend move.
The Japanese interest rate decision comes on Wednesday with a press conference at 2:30pm HKT. The US Federal Reserve has its own interest rate meeting release at 2am, with a press conference to follow and the USD v JPY may have a defined trend into the end of the week.
Traders expect the BoJ to pause its rate-hiking cycle this month after it raised its policy rate to 0.50%, the highest in 17 years, as Japan continues to target a 2% inflation target. Despite growing trade war and economic slowdown fears, Governor Kazuo Ueda and his colleagues continued to hint at further rate hikes if inflation does get to 2%.
Japan’s inflation is at its highest level since January 2023 with Consumer Price figures at 4% in January and core inflation, without food and energy, rising to 2.5% from 2.4% in the month before.
“Long-term interest rates move on various factors. But the biggest determinant is the market’s forecast on the outlook for our short-term policy rate,” Ueda said.
The Federal Reserve is widely expected to keep interest rates on hold and the press conference may have some interesting comments on the recent trade moves and the downturn in the US dollar.
Donald Trump has been critical of the Fed Chair in previous months and may react to any criticism from the central bank. Treasury Secretary Scott Bessent and Trump have said that there will be a short-term upset in the economy, but the US would bounce back to strength after the market settles.
The next few days could see the USDJPY making a move beyond the 149.50 level and extending a move.
