USD/JPY Outlook Amid Central Bank Meetings and Economic Data

Quick look

• • USD/JPY could stabilize around 146.50, with its direction influenced by upcoming Federal Reserve and Bank of Japan meetings.
  • The Bank of Japan may maintain its ultra-easy monetary policy, while the Fed’s rate cut expectations have decreased.
  • Technical analysis suggests key support and resistance levels for USD/JPY, with potential for movement toward the 149.80 to 152 yen range.

USD/JPY’s near-term fate hinges on pivotal central bank meetings. The Bank of Japan (BOJ) convenes on March 18-19 amid intense speculation over policy shifts. Despite potential debates, the consensus, under Governor Kazuo Ueda, might lean towards maintaining the current stance. This caution stems from awaiting further economic data and wage increases from medium-to-small firms, which are crucial for Japan’s economy.
The Federal Open Market Committee’s (FOMC) upcoming decisions could sway market sentiments. Initially poised for four rate cuts, revised expectations now suggest only two or three. This adjustment aligns with anticipations of robust U.S. economic indicators, such as PPI, retail sales, and jobless claims, potentially altering the landscape for USD/JPY.

Technical Analysis and Market Sentiment

USD/JPY’s technical outlook reveals a nuanced picture. After retracting from the 150 level, the pair found a tentative base around 146.48-146.49. Key resistance looms at 148.20 and 148.68, with the Ichimoku cloud offering solid support below. The pair’s rebound off 147.33 underscores underlying bullish sentiment, eyeing the 50-day EMA as a pivotal hurdle.
A broader perspective underscores USD/JPY’s resilience, anchored by a long-term uptrend. The interest rate differential, favouring the USD, continues to attract traders. Support near the 200-day EMA and an ascending channel further bolsters this outlook. While Thursday’s PPI figures may introduce volatility, the overarching trend suggests a trajectory towards 149.80 and potentially 152 yen.
USD/JPY stands at a crossroads, with upcoming economic data and central bank policies as key determinants. Technical indicators and market dynamics provide a cautiously optimistic view, suggesting potential upward movement amid expected volatility. Investors and traders alike are advised to monitor these developments closely, prepared for possible shifts in market sentiment.