FXStreet (Guatemala) – USD/JPY has been up to test the 200 DMA at 121.03 today and indeed breached this key level with some conviction 121.47 at the end of last week. We have since been in consolidation within a relatively wide 100 pip range taking on the FOMC statement this week, pro greenback, while awaiting the BoJ interest rate decision and Semi-Annual Outlook.
BoJ: an uncertain outcome
If we cast our minds back just a few weeks back, we can recall the BoJ was upbeat and left rates and QQE stand pat. Markets preferred to wait and price in the possibility of some action this time around from the BoJ, allowing more time for data components to feed through.
A loser policy might be expected as an outcome of today’s announcements from participants concerned that the members at the BoJ have realized that their own assessments of the 2% inflation target have been…off target. However, data has been mixed of late and leaves big question marks over this meeting’s outcome and the USD/JPY fragile leading into the meeting.
At what time is the BOJ announcement?
USD/JPY key levels to monitor
While we await the decision, the downside has a fair bit of room to go with the bullish bias of late tiring and the price lacks follow-through momentum has been dragging on the coattails of the bulls.
Price needs to overcome the 200 DMA with conviction to attract demand in a continuation of the overall bullish formation and uptrend from end of 2010 business, but a longer phase of consolidation within the wide range of 116/125.85 might be expected until fundamentals can shift into 5th gear one way or the other.
Near term, 119.87, weekly 55 SMA, 118.80, early Sep lows are major supports while the 20 SMA on the weekly at 121.90 will be a strong area of resistance through the recent highs of 121.43.
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