USD/JPY to turn bearish once below 106.60

The USD/JPY pair is down to the 106.90 region, not affected by the Bank of Japan monetary policy decision which left its monetary policy unchanged and downgraded inflation and growth forecasts, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“As expected, the BoJ kept rates unchanged at -0.1%, and its 10-year JGB target around 0%. Also, policymakers downgraded growth forecast, now seeing the economy shrinking between 4.5% and 5.7% in the current fiscal year. Core inflation is expected to stay between -0.5% and -0.7% in the same period.”

“To turn bearish, USD/JPY would need to break below the 106.60 level, as it met buyers in the area several times throughout June and July.” 

“The 4-hour chart shows that the pair remains below all of its moving averages, which remain directionless, reflecting the lack of a clear trend. Technical indicators, in the meantime, have turned flat, although the RSI stands around 40, skewing the risk to the downside.”