Fundamental Analysis

• BOJ decides to lift negative interest rates and abolish YCC
• USDJPY moves in the direction of JPY depreciation
• Attention on the US FOMC and dot plot early tomorrow

USDJPY Technical Analysis

Considering the daily chart of USDJPY and underlying fundamentals. The BOJ has decided on its first rate hike in 17 years. However, the content is about transitioning from negative interest rates to normal monetary easing. The Governor of the BOJ commented that the easing environment will continue, emphasizing that a sharp rate hike is not considered.

After yesterday’s BOJ event, factors that could lead to JPY appreciation have been exhausted. It has already been factored in since last week, and furthermore, the US FOMC and dot plot will be announced early tomorrow.

Although the number of rate hikes is currently expected to be three, it is difficult to predict a rate cut to push up stock prices, considering the US inflation rate is not even in the 2% range and stock prices continue to hit record highs. (Raising interest rates has the effect of curbing economic overheating, while lowering interest rates promotes economic growth)

It is expected that the major trend of JPY depreciation and USD appreciation will not change.

Day Trading Strategy (1-Hour Chart)

Analyzing the 1-hour chart of USDJPY. USDJPY is continuing yesterday’s trend of JPY depreciation and USD appreciation. Of note is that it has surpassed the high of 150.85 JPY, currently moving at 151.25 JPY. The scenario could include entering the 152 JPY range.

The 1-hour RSI is at 76, which is a very high level. However, fundamentally, it is in a state of JPY depreciation. Since there will be profit-taking selling at some point, buying on dips is desired. However, after such a rapid rise, the probability of a deep dip increases.

Waiting for a dip to the early 150 JPY range before initiating a probing purchase is preferred. 152 JPY is expected to be a major resistance line, so profit-taking before it is desired.

Support and Resistance Lines

The following are the support and resistance lines to consider moving forward.

151.80 JPY – Weekly resistance line

150.40 JPY – Major support line

Market Sentiment

USDJPY Sell: 77% Buy: 23%

Today’s important economic indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.