USD/JPY Forecast: Traders Await BOJ’s First Meeting Chaired by New Governor Ueda

Highlights

• Traders await Bank of Japan and U.S. Federal Reserve meetings
• BOJ Governor Ueda expected to maintain ultra-easy policy
• Fed may raise rates by 25 basis points, focus on future guidance

Overview

The Dollar/Yen is trading flat on Monday as traders eagerly anticipate central bank meetings from the Bank of Japan and the U.S. Federal Reserve in the coming weeks. These meetings could provide insights into when the steep increases in interest rates may come to a halt.

At 07:20 GMT, the USD/JPY is trading 134.277, up 0.151 or +0.11%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $69.44, up $0.09 or +0.13%.

New BOJ Governor Ueda’s First Meeting

The Bank of Japan’s policy meeting takes center stage this week as it’s the first meeting chaired by new BOJ Governor Kazuo Ueda. Ueda is expected to maintain the current ultra-easy policy, reassuring markets that policy changes won’t happen quickly. Nevertheless, traders are anticipating a removal of the YCC regime, an interest rate hike at some point this year, and upward pressure on wage growth in Japan due to broadening inflationary pressures.

Ueda Unlikely to Unwind Ultra-Easy Policy

According to a Reuters poll, almost 90% of economists believe that Kazuo Ueda, the new chief of the Bank of Japan, will not begin to unwind its ultra-easy policy during the April 27-28 meeting. The possibility of a surprise policy change at his first rate-review has diminished.

Ueda Stresses Policy Stability Amid Economic Uncertaint

Since taking over from Haruhiko Kuroda earlier this month, Ueda has been reassuring markets that any modifications to the current policy, including the controversial yield curve control (YCC) policy, will not happen quickly. With concerns about financial stability increasing due to Western banking turmoil and a global economic slowdown, Ueda aims to maintain stability in the market.

Fed Set to Raise Rates Amid Debate on Future Guidance

The U.S. Federal Reserve is expected to raise rates by 25 basis points at next week’s Federal Open Market Committee (FOMC) meeting, but the focus will be on future rate guidance. While recent economic data suggests a slowdown in U.S. growth, some parts of the economy remain resilient, and inflation persists. As a result, traders are debating the extent of rate cuts anticipated between July and the end of the year.

Technical Analysis

From a daily technical viewpoint, the USD/JPY is trading on the strong side of its daily pivot at $133.443, but under the R1 level at $137.245. The long-term technicals appear to be in favor of an upside move, but the short-term outlook indicates potential weakness.

A sustained move over the pivot at 133.443 will indicate the buying is getting stronger. This could lead to a near-term acceleration into R1 at 137.245. However, a sustained move under the pivot at 133.443 will put the USD/JPY in a weak position with S1 coming in at 128.973.

For a look at all of today’s economic events, check out our economic calendar.