USDJPY – Weekly Chart – 170126
Despite the USD/JPY gains, rising bets on multiple BoJ rate hikes support a bearish short- to medium-term price outlook for USD/JPY.
Below, we examine the upcoming economic calendar, the medium-term catalysts (4-8 weeks), and the technical levels traders should watch.
Key Japanese Economic Indicators to Watch
In the week ahead, several Japanese economic indicators will influence sentiment toward the BoJ policy stance. Key indicators include machinery orders, trade data, inflation figures, and private sector PMIs.
Given the BoJ’s focus on the effect of US tariffs on external demand and price trends, the trade and inflation figures are likely to be key to the bearish price outlook.
Stronger-than-expected inflation and robust demand for Japanese goods would raise expectations of a second-quarter BoJ rate hike.
Bank of Japan Interest Rate Decision and Quarterly Outlook Report Key to USD/JPY Trends
While the upcoming economic data will influence demand for the yen, the Bank of Japan’s monetary policy decision will be the main event for the week. Economists expect the BoJ to keep interest rates at 0.75% on Friday, January 23. However, the BoJ’s concerns about a weaker yen pushing import prices higher may bring forward plans to tighten monetary policy.
AloJapan.com