USDJPY Forecast: Insights for the New Week & Follow-Up AnalysisThe Japanese yen experienced a slight decline as the Bank of Japan maintained its ultra-loose policy. However, it managed to recover some of its early losses following the BOJ decision, though it remained close to seven-month lows against the dollar. The BOJ opted to keep interest rates unchanged at record lows and expressed its intention to continue the yield curve control policy in support of economic growth. The bank also forecasted above-average strength in the Japanese economy for the year.
The yen had been weighed down by expectations of a dovish BOJ, especially as the Federal Reserve signaled a relatively hawkish stance, indicating a widening gap between Japanese and U.S. interest rates. While the Fed had previously paused rate hikes, it foresees at least two more increases this year due to inflation trending above the central bank's target range.
Nevertheless, weak U.S. economic indicators such as slowing industrial production, steady jobless claims, and sluggish retail sales raised doubts about the extent to which the Fed could continue raising interest rates.
Anticipated higher U.S. interest rates for a longer period are likely to restrict significant gains in Asian markets. In the upcoming week, we will focus on economic events from both the U.S. and Japan, including the BoJ Monetary Policy Meeting Minutes and the Fed Chair's testimony before Congress. How will these events impact the USDJPY from a technical standpoint?
During the video, I provide detailed analysis of the USDJPY's bullish and bearish sentiment, primarily focusing on price action-based technical indicators. We identify key support and resistance levels within the 4-hour timeframe to uncover potential trading opportunities. Notably, we highlight a significant level around 142.000 that was recently tested, and how market participants react to this level at the start of the new week may play a critical role in determining the direction of price action in the upcoming week.
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