The USD/JPY pair reached an important daily resistance zone, forming a bearish candlestick pattern (yesterday's long lower wick and today's strong bearish candle.)
The daily RSI is forming a bearish divergence, signaling that the recent up-move is losing momentum. The low of the up-move represents a lower low - a characteristic of a downtrend.
The JPY has weakened in the last days as markets expect an easing stance from the Bank of Japan's next meeting.
However, I believe that BoJ will maintain its current interest rates for a few reasons:
1) The JPY is not too strong at the moment, and unless we see USD/JPY around 100.00, BoJ doesn't have to worry.
2) The Fed has to be very aggressive with their upcoming rate cuts for the BoJ to lower rates as well.
3) The BoJ already has negative rates, with cutting rates further having diminishing effects.
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The daily RSI is forming a bearish divergence, signaling that the recent up-move is losing momentum. The low of the up-move represents a lower low - a characteristic of a downtrend.
The JPY has weakened in the last days as markets expect an easing stance from the Bank of Japan's next meeting.
However, I believe that BoJ will maintain its current interest rates for a few reasons:
1) The JPY is not too strong at the moment, and unless we see USD/JPY around 100.00, BoJ doesn't have to worry.
2) The Fed has to be very aggressive with their upcoming rate cuts for the BoJ to lower rates as well.
3) The BoJ already has negative rates, with cutting rates further having diminishing effects.
Please hit the "LIKE" button if you find this analysis useful. Thanks!
