News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • US Dollar Index (DXY) squeeze took market by surprise. A small digestion period would do some good for further gains. Get your $USD market update from @PaulRobinsonFX here:https://t.co/tRGP92y9Wl https://t.co/Mg0vZ9TfPN
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.83% Wall Street: 0.75% US 500: 0.46% France 40: 0.37% FTSE 100: 0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/kQwm7ut3fw
  • Market drivers for the week after the Fed: MOAR FED https://t.co/VP5heIkQKX
  • FOMC Speakers this week https://t.co/apjI8NU5VW
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjKnct https://t.co/oNFTe8ulAB
  • 🇺🇸 Chicago Fed National Activity Index (MAY) Actual: 0.29 Previous: -0.09 https://www.dailyfx.com/economic-calendar#2021-06-21
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Gold are long at 84.83%, while traders in France 40 are at opposite extremes with 69.62%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/3hAexw35Fc
  • LIVE NOW: Join Technical Strategist @MBForex for his Weekly Strategy Webinar to review the setups we're tracking into the weekly open! - https://t.co/chKtG7ezG9
  • German Health Minister Spahn says there is a risk of a fourth wave due to Delta variant
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.55% 🇬🇧GBP: 0.55% 🇦🇺AUD: 0.48% 🇪🇺EUR: 0.22% 🇨🇭CHF: 0.20% 🇯🇵JPY: 0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/FM00rPZ81G
USDJPY Analysis: Bears Find Hope as BoJ Show Divide on QQE Measures

USDJPY Analysis: Bears Find Hope as BoJ Show Divide on QQE Measures

Justin McQueen, Analyst

USDJPY Analysis and Talking Points

  • BoJ Disagree on Tolerance for Yield Movement
  • BoJ Had Planned to Hike Rates Twice This Year

See our Q3 JPY forecast to learn what will drive the JPY through the quarter.

BoJ Disagree on Tolerance for Yield Movement

Overnight the Bank of Japan released the summary of opinions from its monetary policy meeting last week. One thing that was made apparent from the report was that a divide is beginning to show among board members amid disagreements on how far yields should be allowed to move from the central bank’s target. At the post-meeting, Governor Kuroda stated that long-term yields are to move at double the previous range of -0.1%-0.1%. However, one member stated that the BoJ should allow for yields to move by around 0.25%. Another board member had warned that by allowing yields to move when inflation expectations remain subdued could result in lower price growth.

Following last week’s announcement, markets have pushed long-term bond yields to the highest level since 2016 as they test the BoJ’s new limit, which in turn has supported the Japanese Yen and will continue to underpin the currency.

BoJ Had Planned to Hike Rates Twice This Year

In an interview with Reuters, people familiar with the Bank of Japan’s thinking had noted that the central bank had planned to make an announcement to lift rates, however, market volatility at the beginning of the year had prevented such action. Additionally, the bank had hoped to signal a move higher in rates last month with a view to raise them in September, although, the persistent low inflation levels in Japan had also stopped this idea. Overall this shows that the BoJ is becoming less dovish with this view supported by last week’s policy tweaks.

Where Next for USDJPY?

According to IG Client Positioningdata shows 58.6% of traders are net-long with the ratio of traders long to short at 1.42 to 1. In fact, traders have remained net-long since Jul 23 when USDJPY traded near 111.374; price has remained unchanged since then. The number of traders net-long is 3.8% lower than yesterday and 4.3% higher from last week, while the number of traders net-short is 1.2% lower than yesterday and 6.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.

USDJPY PRICE CHART: Daily Time Frame (March-August 2018)

USDJPY Analysis: Bears Find Hope as BoJ Show Divide on QQE Measures

Chart by IG

USDJPY is trading heavy today having dipped below 111.00. Key downside levels to watch is 110.50, whereby a break below could open the gate for larger losses in the pair. Alongside this, USDJPY long positioning also remains at extreme levels, with longs valued at $7.65bln, consequently suggesting that the pair is vulnerable to short squeeze.

FX TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES