The USD/JPY is banging up against highs it has not traded since May of 1990 and speculators should be ready for an assortment of volatility to develop.
- The USD/JPY is near the 155.500 level as of this writing, this is not a misprint.
- For traders who do not pay attention to the USD/JPY perhaps it is time you do so, this to gain some insights while observing the world of central bank management (or mismanagement) depending on your viewpoint.
- The heights in value now being traded in the USD/JPY are touching levels not seen since May of 1990.
- Having broken through the 155.000 has certainly raised eyebrows even among experienced USD/JPY traders.
Technically trying to judge the highs of the USD/JPY and then saying in a confident manner the currency pair cannot traverse towards another apex amount should be avoided. The ability of the USD/JPY to continue climbing has taken many day traders by surprise. However, financial institutions which are positioning for future transactions are sending a clear message, they want to see the Bank of Japan introduce a higher interest rate or they will continue to make the Japanese Yen weaker – thus higher via the USD/JPY movement.
Complexity of USD/JPY as Bank of Japan Practices Different Ideas
Yet, the Bank of Japan is clearly not responding to the heights of the USD/JPY and may actually want them. Fears of an intervention are growing as traders look at the ‘record’ values in the USD/JPY and wonder when the Bank of Japan will take action to protect the Japanese Yen. It has become clear the BoJ wants the Japanese Yen to be weak, maybe not at its current levels, but the current ratio of the USD/JPY helps the Japanese export sector which is massive. It should also be mentioned tourism to Japan is flourishing and seeing a surge in visitors because of the exchange rate.
Speculators need to know the following; the Bank of Japan is conducting its monetary policy meetings right now. Early tomorrow the BoJ will announce their Policy Rate decision. The current borrowing cost is only 0.10% in Japan. It was increased for the first time in 17 years in March. Many people believe the BoJ should raise the Policy Rate again.
Bank of Japan Policy Decision is Tomorrow
The BoJ has not let the financial world know what it will do yet, but if Japan’s central bank does not increase rates tomorrow, it likely means they will intervene in the USD/JPY at some point. The BoJ is not in a comfortable spot. Until the Bank of Japan issues a clear policy and makes it known that it has a long-term plan, the USD/JPY will remain a risky currency pair to trade. While the USD/JPY looks extremely overbought at its current levels, the short-term may continue to prove bewildering for day traders, and traders need to remember the ‘market’ is always right.
- Concerns and plenty of questions are being asked about the long-term objectives of the Bank of Japan.
- Confusion and a lack of clarity are ruling the USD/JPY. And traders should expect price action to be volatile and fast before and after the BoJ announcements.
USD/JPY Short Term Outlook:
Current Resistance: 155.650
Current Support: 155.450
High Target: 156.300
Low Target: 155.150
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