USD/JPY may stage a stronger rebound ahead of the Bank of Japan (BoJ) meeting, with the central bank predicted to keep interest rates unchanged.
US Dollar Outlook: USD/JPY
USD/JPY trades near the weekly high (149.20), despite the fact that the University of Michigan Confidence survey printed at 57.9 in March, compared to forecasts of 63.1, and the exchange rate may attempt to retrace the decline from the monthly high (151.31), as the recent rebound keeps the Relative Strength Index (RSI) out of oversold territory.
In turn, the RSI may show that bearish momentum is abating as it moves away from oversold territory, and the BoJ rate decision may keep USD/JPY afloat as the central bank takes a methodical approach to normalising monetary policy.
Japan Economic Calendar
The Bank of Japan is expected to retain the benchmark interest rate at 0.50% after raising it by 25 basis points in January, and the central bank may adopt a wait-and-see strategy as the ongoing transition in US trade policy clouds the outlook for global growth.
As a result, USD/JPY may extend its recovery from the monthly low (146.54) if the BoJ dampens speculation of an impending rate hike, but more of the same from the central bank may drag on the exchange rate as Governor Kazuo Ueda and Co. acknowledge that ‘if the outlook for economic activity and prices presented in the January Outlook Report will be realized, the Bank will accordingly continue to raise the policy interest rate.
USD/JPY Price Chart – Daily
- USD/JPY appears to be locked in a narrow range after snapping last week’s lower highs and lows, but a move back above the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone might drive the exchange pair towards the monthly high (151.31).
- The next area of interest is around 151.95 (2022 high), however USD/JPY may continue to fall below the 50-Day SMA (152.84) and struggle to trade above the 148.70 (38.2% Fibonacci retracement) to 150.30 (61.8% Fibonacci extension) zone.
- If USD/JPY fails to defend the monthly bottom (146.54), it may fall to the 144.60 (50% Fibonacci retracement) to 145.90 (50% Fibonacci extension) range, with the next level of interest being around the October low (142.97).