BOJ Policy Rate - USDJPY Technical Analysis

Source: Bloomberg Terminal[/caption]

Exports mainly drive Japan’s economy, and the yen's value against the US Dollar can significantly affect overall economic performance. The above chart shows the correlation between Japan’s export price index JNWSEXPY (Blue line) and USDJPY (Green bars), while the yellow line represents Japan’s CPI – JNCPIYOY. The recent increase in the export index is not in line with inflation and was possibly driven by a weak yen, which may be undervalued, thus less of a negative impact on Japan’s economy in case of a BOJ hike.

Source: Tradingview.com[/caption]

• Price action was trading in an uptrend (Trendline1), followed by flag formation.
• Price broke out above the flag formation and resumed its uptrend (Trendline2), followed by a range trading pattern. Price action broke below the trading range and is currently in a pullback mode, finding resistance below the breakout level (the lower border of the trading range); the same level was a resistance in early Feb 2024. (Yellow ellipse)
• Price is trading above its fast and intermediate moving averages, EMA9, MA9, and MA21; the intersection of the three averages may represent a confluence of support if the price fails to reenter the broken trading range.
• The fast RSI is at the overbought level and in line with price action, while the smoothed RSI points down after reaching level 66, just below overbought.

Source: Cotbase.com[/caption]

The COT report for the week ending on March 15^th, 2024 (Includes data up to the end of day Tuesday, March 12^th, 2024) reflects the three TIFF report categories, Asset Manager/Institution, Leveraged Funds, and Dealer/Intermediary, all reflect negative divergence with price action. (Image flipped to USDJPY)