Daily Analysis USDJPY - 24 July 2023

The Bank of Japan is scheduled to hold its upcoming 2-day policy meeting next week. It is widely anticipated that the bank will maintain its current policy settings, with interest rates to be kept at -0.1% and Yield Curve Control (YCC) retained. The YCC aims to flexibly target 10-year yields at 0%, allowing a range of +/- 50 basis points.

During the meeting, the central bank will also release its latest Outlook Report, which includes the Board members' median forecasts for Real GDP and Core CPI. Some press reports have suggested that the Bank of Japan might raise the inflation forecast above the 2% target level at this meeting. If this happens, it could potentially pave the way for further policy normalization.

There has been speculation regarding a possible adjustment to yield curve control. Former BoJ Director Hayakawa expects that the bank might tweak its policy by raising the 10-year yield ceiling to 1.0% this month. However, on Friday, Reuters sources indicated that the Bank of Japan is leaning towards maintaining its current yield control policy during the upcoming meeting.

USDJPY at the 142 level serves as the second resistance level, especially the upper parallel of the current downward channel act as resistance for the current price action also the historical level of 142 is important.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
142.00	141.20	140.22	139.00	138.00	136.00