USDJPY: markets await the Bank of Japan's decision

The USDJPY rate is correcting after rebounding from the 143.40 resistance level. Find out more in our analysis for 19 September 2024.

USDJPY forecast: key trading points

• Jerome Powell’s comments: further large interest rate cuts will not be the new standard
• US economic data expectations: focus on initial jobless claims and existing home sales
• The Bank of Japan decision: the current interest rate is expected to remain unchanged on Friday, but signals of future hikes are possible
• Japan’s inflation data: the core CPI is projected to decrease to 2.5%, potentially affecting BoJ’s further actions
• USDJPY forecast for 19 September 2024: 141.30, 139.10, and 137.77

Fundamental analysis

Investors, who expected sharp fluctuations in the USDJPY rate after the US Fed interest rate cut, saw a more restrained reaction. The US dollar rate strengthened on comments from Federal Reserve Chair Powell that the regulator does not intend to rush to ease monetary policy and that a 50-basis-point rate cut will not become a regular occurrence. However, analysts believe the relative calm will not last long, with the markets likely to face unexpected fluctuations in the coming hours as rate expectations in other economies intensify.

Investors will now be closely watching the upcoming US economic data, including initial jobless claims and existing home sales. Initial jobless claims are expected to decrease from 230,000 to 226,000. Such a slight reduction may signal stability in the employment market, which is a significant indicator for assessing the state of the US economy. Existing home sales are also projected to fall from 3.95 million to 3.91 million homes. The slowdown in the real estate market may be due to elevated interest rates, which make mortgage loans more expensive, reducing demand for home purchases.

The Bank of Japan's monetary policy decision will also be in the spotlight on Friday and may significantly change today’s USDJPY forecast. The regulator is expected to maintain current monetary policy parameters, keeping the interest rate unchanged. However, the BoJ may signal potential future rate hikes, especially if inflation and economic indicators change noticeably. Investors are also keeping a close eye on Japan’s inflation data for August, which is due on Friday. The core CPI is projected to fall to 2.5%. This will indicate easing inflation, which will reduce the pressure on the BoJ when making further decisions.

USDJPY technical analysis

The USDJPY H4 chart shows that the market has completed a growth wave, reaching 143.90, on the fundamental background. A new downward wave could start today, 19 September 2024, targeting 137.77. A growth wave is currently forming, aiming for 141.28 as the first target. After the price reaches this level, a rise to 142.70 is expected, followed by a downward wave towards 141.00. A breakout below this level may indicate a further movement towards 139.10, with the trend potentially continuing towards 137.77.

Summary

Although the 50-basis-point Federal Reserve interest rate cut and subsequent comments from the regulator’s chair slightly strengthened the US dollar, analysts warn of potential sharp fluctuations in the markets due to rate expectations in other economies. The BoJ decision and Japan’s inflation data for August may significantly impact the USDJPY rate. Technical indicators in today’s USDJPY forecast suggest that the downward wave could continue towards the 141.30, 139.10, and 137.77 levels.