empty
InstaForex - Official partner of Dragon Racing
InstaForex - Official partner of Dragon Racing
This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.
Start as Beginner
How to start trading
Useful information
Training and recordings
InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.
Become Investor
PAMM System
ForexCopy System
Passive investments
Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.
Become Partner
Main Page
Partner Area
Advantages for Affiliates
Registration
This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.
All Promo Campaigns
Bonuses
Contests
Events
Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.
Full details
Forums
We are in social networks
Forex humour
Forex Portal
InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.
Learn More
History
Why Choose Us
InstaSport
Regulation
Company News
Awards
InstaForex Stars
InstaForex Offline
Headquarters
Key documents
Social Responsibility
17.01.2023 09:31 AM
USD/JPY is in a dangerous situation
Open trading account Open demo account

This image is no longer relevant

USD/JPY traders are feeling nervous. The Bank of Japan will sum up the results of its 2-day monetary policy meeting on Wednesday. Now any surprise from the BOJ could have a significant effect.

The culminating event of the week in the currency market should be the Japanese central bank's monetary policy meeting, which kicked off on Tuesday.

With inflationary pressures intensifying in Japan and chaos reigning in the local bond market, many investors believe that the BOJ could announce a major policy shift this week, like it did last month.

Recall that the BOJ tweaked its Yield Curve Control policy (YCC) in December, causing the yen to rise sharply against the dollar. Since then the pair has fallen over 6% and its future prospects are not bright at all.

Investors clearly see that the BOJ is in a difficult predicament. Its decision to widen its tolerance range for 10-year bond yields was dictated by a desire to improve market functioning, as the bond market faced a liquidity problem. But the measure has made the situation even worse.

By changing the YCC, the BOJ stoked the flames of market speculation about its possible surrender. This in turn provoked a massive sell-off in 10-year Japanese Government Bonds (JGB), which pushed their yields up.

Since last week, the central bank has been trying its best to keep the index within the new limits by conducting daily emergency operations to buy JGBs. However the yield of 10-year JGBs is still growing above the set ceiling.

That's what leads investors to think that the BOJ will be forced to further increase the permissible range of long-term bond yield fluctuations from its 0% target at the January meeting.

If the BOJ makes such a decision again, it will serve as a great catalyst for the yen. In the short term, the USD/JPY risks falling below its 7-month low at 127.22.

This image is no longer relevant

An even greater threat to the pair is the development of a radical scenario, which implies a complete abandonment of the BOJ's YCC policy. If the central bank decides to burn all bridges, USD/JPY will go into a prolonged free-fall.

"The 10-year JGB yield could rise as high as 1% if the BOJ abandons yield curve control this week," according to estimates by Daiwa Securities strategist Eiichiro Tani. This negatively affects the movement of the pair.

According to analysts at Goldman Sachs, the next YCC correction will help the yen strengthen against the dollar by more than 3%, to the level of 125, and an abandonment of the YCC will open a fast way to even higher levels for the Japanese currency.

It's worth noting that US bank analysts don't even consider the latter scenario. Most of Goldman Sachs' analysts expect the BOJ to keep YCC in place with possible further tweaks to improve its sustainability.

Financial analyst Barbara Rockefeller is of the same opinion. She believes that we should not expect the BOJ to take impulsive actions in the form of abandoning the YCC or a sharp change in the monetary course.

"Allowing a giant move from 25 bp to 1% in under a month is too wild for any central bank, let alone the staid BoJ. So, abandonment is almost certainly out of the question, but that doesn't mean the market will not be expecting it and testing prices, forcing the bank to buy more bonds. We expect a whole lot of backroom arm twisting," Rockefeller said.

According to ING economists, the USD/JPY pair can fall sharply ahead of the results of the BOJ meeting. They suspect USD/JPY can trade down to 126.50 before Wednesday.

As for the dynamics of the dollar-yen asset after summing up the results of the BOJ meeting, everything depends on the market's reaction to the rhetoric of the Japanese officials. If it is considered hawkish, the quote will fall, as I mentioned before.

If the central bank stays true to its dovish principles, in the short-term, the pair may show a steady recovery from the recent lows. By the way, this scenario is followed by all economists recently surveyed by Bloomberg.

Experts expect the BOJ to refrain from any changes at its January meeting. But the probability they are wrong is quite high, because last month none of the 47 economists surveyed by Bloomberg was able to predict YCC changes.

Аlena Ivannitskaya,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
All Analytics
Fundamental analysis
XAU/USD. Analysis and Forecast Gold is declining below the $3300 level today. U.S. PCE data met expectations. A shift in trade flows is helping the U.S. dollar regain positive momentum. This is also undermining
Irina Yanina
17:37 2025-05-30 +02:00
2950
Wave analysis
GBP/USD Analysis on May 30, 2025 The wave structure for GBP/USD continues to indicate the development of an upward impulsive wave pattern. The wave pattern is almost identical to that of EUR/USD. Until February
Chin Zhao
17:31 2025-05-30 +02:00
2425
Breaking Forecast Trading Plan Cryptocurrencies USD/RUB Russian Economy Video Analysis
Trading Instruments
EURUSD GBPUSD USDCHF USDCAD USDJPY AUDUSD EURGBP EURJPY NZDUSD EURNZD Silver Gold #CL #USDX COVID-19 Bitcoin
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Boeing climbs, Best Buy falls as investors rebalance across sectors

Best Buy shares fell after the company cut its full-year sales and earnings forecasts. Boeing, on the other hand, gained ground as its CEO announced plans to ramp up production
13:49 2025-05-30 UTC+2

US Market News Digest for May 30

The S&P 500 opened the session on a positive note but soon reversed course after officials clarified that previously overturned tariffs would remain in place pending the outcome
Ekaterina Kiseleva 12:20 2025-05-30 UTC+2

Boeing Gains, Best Buy Falls: Why Investors Are Betting on Different Assets

Best Buy Falls After Full-Year Sales, Profit Outlook Shrink Boeing Gains as CEO Looks to Boost 737 MAX Production Japan's Nikkei Lagging as Yen Strengthens on Safe Haven Demand Indices
Thomas Frank 10:10 2025-05-30 UTC+2

US Market News Digest for May 29

Markets reacted to a US Court of International Trade ruling that found the Trump administration's tariff actions exceeded its authority. The decision has introduced fresh uncertainty for the S&P
Ekaterina Kiseleva 11:15 2025-05-29 UTC+2

Stock storm: Nvidia soars, Dow falls, court knocks down Trump tariffs

Nvidia shares up 5% after close; co reports quarterly results Dick's Sporting Goods rises after Q1 results beat expectations US trade court blocks Trump tariffs European stocks rise
Thomas Frank 10:49 2025-05-29 UTC+2

From Nvidia to Xiaomi: What's Driving Stock Market Growth and Decline Today

Indices Rising: Dow 1.78%, S&P 500 2.05%, Nasdaq 2.47% Consumer Confidence Recovers in May Temu Parent PDD Holdings Falls on Quarterly Revenue Slip Chinese Xiaomi Shares Set to Rise 2.3%
Thomas Frank 12:06 2025-05-28 UTC+2

Whoever doesn't risk a recession doesn't reduce the national debt? Trader's calendar on May 29–31

To be at the center of global attention and to "shape the planet's destiny" — that's what Donald Trump enjoys most. For him, it's essential to constantly generate headlines
Svetlana Radchenko 11:47 2025-05-28 UTC+2

US Market News Digest for May 28

The S&P 500 index has broken through the key 5,908 level, signaling the end of its recent correction and opening the door to further upside. A break above the resistance
Ekaterina Kiseleva 11:25 2025-05-28 UTC+2

US Market News Digest for May 27

US President Donald Trump announced a 50% tariff on imports from the EU, yet financial markets responded with restraint. Investors are increasingly adopting a "threat and retreat" strategy, buying stocks
Ekaterina Kiseleva 11:54 2025-05-27 UTC+2

Nvidia on the agenda: markets await quarterly report, dollar nears fifth straight monthly decline

Stock markets showed mixed dynamics on Tuesday after Donald Trump unexpectedly postponed the introduction of the promised 50% tariffs on goods from the European Union. The move only increased uncertainty
Thomas Frank 11:31 2025-05-27 UTC+2

Top analytics

Relevance up to 04:00 UTC--4
Legal Disputes Between Trump and Companies Over Tariffs Will Negatively Impact Markets (There Is a Likelihood of Continued Decline in Bitcoin and Litecoin Prices)
11:11 2025-05-30
Fundamental analysis
Relevance up to 11:00 2025-06-13 UTC--4
Trading Signals for GOLD for May 30, 2025: buy above $3,281 (200 EMA - 6/8 Murray)
17:35 2025-05-30
Technical analysis
Relevance up to 11:00 2025-06-13 UTC--4
Trading Signals for EUR/USD for May 30, 2025: sell below 1.1350 (21 SMA - 5/8 Murray)
17:33 2025-05-30
Technical analysis
Relevance up to 02:00 2025-06-02 UTC--4
Markets Demand an Appeal
10:33 2025-05-30
Fundamental analysis
Relevance up to 10:00 2025-06-03 UTC--4
The Dollar Puts on a Brave Face Amid Adversity
00:50 2025-05-30
Fundamental analysis
Can't speak right now?
Ask your question in the chat.
Widget callback
Callback widget
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.