The Japanese Yen (JPY) is exhibiting minor gains on Thursday following the Bank of Japan’s (BoJ) decision to maintain its bond-buying operation levels. This news comes after a previous reduction in purchases over a month ago.
JPY Market:
- BoJ Decision: The JPY seems relatively unfazed by the BoJ’s announcement, possibly due to a lack of change in policy.
- Japanese PMI: Despite positive PMI data indicating an expansion in Japan’s private sector, the JPY hasn’t shown a significant surge.
Focus on US Dollar:
- US PMI Release: The main market focus has shifted to the upcoming US PMI data for May, which could influence the US Dollar (USD) and impact the USD/JPY pair.
- FOMC Minutes Impact: The USD strengthened on Wednesday after the release of FOMC minutes, revealing concerns from Fed policymakers regarding persistent inflation.
Technical Analysis (USD/JPY):
- USD/JPY Price Level: The USD/JPY pair currently trades around 156.70.
- Rising Wedge Pattern: A rising wedge pattern on the daily chart suggests a potential bearish reversal as the price approaches the wedge’s tip.
- RSI Indicator: The 14-day Relative Strength Index (RSI) remains slightly above 50, indicating some ongoing upward momentum. However, a further decline could signal a shift.
Possible Scenarios:
- USD/JPY Upside: A break above the psychological barrier of 157.00 could propel the pair towards its recent high of 160.32.
- USD/JPY Downside: A decline below the wedge’s lower boundary and the 21-day EMA (155.49) could exert downward pressure, potentially reaching the 151.86 support level.
The JPY is currently stable, with its near-term direction likely dependent on the US PMI data and its impact on the USD. A strong US PMI could strengthen the USD and put downward pressure on the JPY, while a weaker PMI might lead to a USD decline and potential JPY gains. Monitoring these data releases and any further developments is crucial.
