Baxia Markets
November 01, 2023

USD/JPY Pulls Back from Yearly High Amid BoJ's Dovish Tone

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During the Asian session on Wednesday, USD/JPY was trading around 151.20, experiencing a retracement from its annual high reached in the wake of the Bank of Japan's (BoJ) decision to eliminate the 1% ceiling for the 10-year government bond yield the previous day. This move in the pair was triggered by the BoJ's modification of the yield curve control (YCC) strategy. BoJ Governor Kazuo Ueda conveyed a notably dovish sentiment following this adjustment, voicing concerns about inflation failing to definitively reach the central bank's long-term targets.

USD/JPY Pulls Back from Yearly High Amid BoJ's Dovish Tone

USDJPY Price Action

In general, USDJPY maintains a bullish trajectory. When scrutinizing the Ichimoku indicator, both the Tenkan sen and Kijun sen lines are positioned above the cloud, signifying a bullish trend. Additionally, the chikou line remains above the highs from the previous 26 days/periods, further corroborating the bullish sentiment. Nevertheless, despite the overarching bullish trend, the current price has dipped below the Kijun line. This event suggests a bullish correction or pullback, potentially making it a favorable proposition to consider buying on market weakness.


The MACD indicator aligns with this notion of a pullback. While both the histogram and the signal line continue to stay above the 0 line, signifying an overall bullish trend, the histogram now resides below the signal line. This alignment underscores the presence of a micro-trend representing a bullish correction.


The RSI momentum indicator (with a 14-period setting) also aligns with the bullish outlook. However, it's crucial for this indicator to remain above the 40 mark to maintain its bullish momentum. A drop below 40 could indicate the emergence of a bearish trend.


The lower segment of the value area, marked in pink and plotted on the volume profile indicator, serves as a key support level. As of now, the price is above this value area, indicating a bullish sentiment. However, if the market descends below it, this could signify a shift towards a bearish trend.

Key Economic Releases to Watch Today

US,  ADP Nonfarm Employment Change (Oct)

Forecast 150Kvs Previous 89K

US,  JOLTs Job Openings (Sep)

Forecast 9.250M vs Previous 9.610M

US, ISM Manufacturing PMI (Oct)

Forecast 49.0 vs Previous 49.0

US,  Fed Interest Rate Decision

Forecast 5.50% vs Previous 5.50%


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