Potential Trigger: BOJ Governor's Speech and Quarter-End Outlook Impact Yen's Weakening Trend

Potential Trigger

On Wednesday, starting around 930am est, BOJ Governor Ueda will speak on an ECB forum panel with BOE Gov Bailey, ECB President Lagarde, and Fed Chair Powell. Yen watchers are awaiting any sign that BOJ is getting ready to tweak its control of the yield curve.
Quarter-end could also spark a reversal for the steadily weakening yen (132 to 144).
Traders will also pay close attention to Friday’s US PCE data as softer inflation data could cement the market’s expectation that the Fed will be done after one more hike.

Key Levels

Intraday moves have supported a steadily weakening yen, but it may have a neutral bias until we hear from BOJ Gov Ueda on Wednesday morning. Upside resistance may come from 144.70, which is the 70.7% Fibonacci retracement of the October high to January low move. If a daily close occurs above the 145 level, further bullish momentum could target 146.11. To the downside, 143.10 provides initial support. Any hawkish fireworks from Ueda could support the case for a test of the 142.50 region.

If Ueda stays the course, the yen could continue to weaken. Japan intervened last fall when the yen weakened towards 145 and after prices breached 150. Sustained weakness won’t be tolerated and expectations for action will grow if yen weakens beyond 145. Everyone has their eye on the 150 level, so it will be interesting to see if that makes that barrier to hard to reach.

Ed Moya

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.