After the closing of last week’s transactions, the price of the USD/JPY currency pair stabilized around its highest gain in two months. It also tested the resistance 136.55, after strong indications of the future of a strong US rate hike in the coming period to contain US inflation, which has risen again. On the other hand, the Japanese central bank, under new leadership, may keep its policy unchanged for a while.
In this regard, Kazuo Ueda, the candidate for governor of the Bank of Japan, said that monetary easing should continue to support the recovery of the economy, a comment that indicates that he will not seek an immediate change in policy if approved to lead the central bank. At the second parliamentary hearing in the confirmation process, Ueda said the benefits of the BoJ's stimulus outweigh its side effects, once again reinforcing the view that it is not seeking a quick move away from a decade of massive easing.
However, he acknowledged that some policy shifts should come as a surprise to avoid speculation, an observation that may support the view of market players betting on change sooner rather than later. Some argue that the side effects of the BOJ's yield curve control program are increasingly putting pressure on the performance of the financial market. "I think it's appropriate that monetary easing continues," Ueda said. “For a policy review, I think there should be a significant improvement in price direction.”
Ueda continued to play it safe in the final session before the parliamentary vote on his nomination. By referring to both sides of arguments on topics including the future of monetary policy, Ueda kept his options open for the governorship starting in April. Global traders and investors are seeking any hints on how he will manage the Bank of Japan's policy amid intense speculation of a policy adjustment under his leadership.
After one of the most aggressive monetary easing programs of modern times, the Bank of Japan has become one of the last remaining anchors of low interest rates around the world. Any changes to its policy would likely shake up financial markets, as it did most recently in December. Ueda said the challenges the central bank faces, including its impact on market performance and its huge holdings of assets, present difficulties for whoever heads the bank. He added that it would depend on his academic background and time as a member of the Board of Directors of the Bank of Japan if selected.
Dollar expectations against the Japanese yen today:
- There is no change in my technical view of the USD/JPY price performance.
- The general trend is still bullish, and expectations may increase for the future to test the psychological resistance 140.00 again, in case the bulls move towards the nearest resistance 137.90 on the daily chart below.
- Confidence in the bulls' control may be shaken in the event that the currency pair moves below the support level of 133.90.
- The dollar / yen pair is still buying from every downward level.
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