To Retest 134.76 if this Happens

The USD/JPY price next event will be the upcoming American inflation data. 

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The yen is a popular asset during turbulent times.

Bullish view

• Set a buy-stop at 132.90 and a take-profit at 134.76.
• Add a stop-loss at 129.87.
• Timeline: 1-3 days.

Bearish view

• Set a sell-stop at 131.67 and a take-profit at 130.
• Add a stop-loss at 133.

The Japanese yen has been in the spotlight in the past few days as the replacement of BoJ’s Haruhiko Kuroda became certain. The USD/JPY pair initially slumped to a low of 129.76 on Friday and then pared back those losses to about 132.85.

Next BoJ governor

The BoJ has taken an extremely different monetary policy compared to other global central banks. Under Governor Haruhiko Kuroda, the bank left interest rates in the negative zone and embarked on a prolonged period of quantitative easing (QE) policy that pushed the country’s balance sheet to over $8 trillion.

The BoJ has also been the major central bank to maintain its policy in the past few months. It left interest rates and its yield curve policy unchanged at a time when central banks like the Federal Reserve and Bank of England (BoE) delivered numerous rate increases.

Therefore, the USD/JPY pulled back after media reports said that the next governor will be Kazuo Uoda, a macroeconomics expert. He is seen as an institutionalist with no political inclination. As such, with Japan’s inflation sitting at the highest point in decades, some analysts believe hat he will embrace a more hawkish tone.

However, it is still unclear whether this will happen since the BoJ insists that inflation is still transitory and that it will inch downwards soon. This explains why the USD/JPY pair erased some of the initial losses.

The USD/JPY price next event will be the upcoming American inflation data. These numbers, which will come in the afternoon session, will provide more signals of what the Fed will do later this year. Strong inflation numbers will signal that the Fed will continue hiking rates at an aggressive pace.

USD/JPY forecast

The USD to JPY pair has been in a slow bullish trend in the past few days. It is trading at 132.85, which is important since it was its highest point on February 6 this year. This price was also the highest level on January 11.

It has risen above the 50-period moving average and the black ascending trendline. Therefore, the next key price action will depend on whether the pair will move above 132.85. Flipping this price into support will mean that bulls have prevailed and push it to the next psychological point at 134.76 (January 6 high).