JPY Strengthens as Bets of BoJ Pivot Increase


USDJPY Weekly Chart

The USDJPY dynamic has changed over the last month after the currency pair reached an overbought condition (blue rectangle) on its weekly chart. The currency pair's green 5-week EMA has now crossed below its orange 10-week EMA (black ellipse). This puts the EMAs into a bearish formation, with a bias towards JPY strength. Moreover, USDJPY's RSI has dipped below 50 (black rectangle). This is the bearish side of the indicator and the longer it maintains below 50, the greater the likelihood of further appreciation of yen against the dollar.


The Bank of Japan (BoJ) is due to release its monetary policy statement on 19 December and there is some assumption that the central bank will end eight years of negative interest rates. Whilst this is speculative, the prospect of policy shift resulted in the yen jumping by its highest levels since January. Earlier today BoJ Governor Kazuo Ueda said that the BoJ has several options on which rates to target once negative rates end. Markets took this as a sign that a policy shift is imminent with the yen jumping higher.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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