USDJPY topping pattern as BoJ changes governor

  • USDJPY
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The USDJPY appears to be charting a head and shoulders top. The pattern is yet to complete, as per the pattern completion gap, but its RSI is on the bearish side of 50 (green rectangle). If it maintains on this side of 50, the USDJPY will likely be under pressure.

Kazuo Ueda was recently appointed as the new head of Japan's central bank, succeeding Haruhiko Kuroda. The country's shift toward inflation after decades of deflation could mark a positive change for the economy, which is the world's third-largest. Ueda, an economist with a Ph.D. from MIT, is expected to gradually alter Kuroda's policies. While the Bank of Japan has not yet shown an eagerness to normalize policy, even small changes could have a significant impact, as the central bank controls half of the country's $8 trillion bond market.

Adjusting the yield-curve control system, which limits the spread between prime rates and bond yields of various durations, is expected to be one of Ueda's first moves. Investors predict that this change could happen at a June BoJ board meeting, potentially strengthening the yen and making Japanese bonds more attractive to investors.

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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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