Today is a significant day for the pairing of the USDJPY. Both the Bank of Japan and the Federal Reserve are meeting, with key decisions from both countries expected today. The BoJ will publish any changes early Wednesday, with the Fed expected to release more news on their potential rate increase later in the evening (UTC time for both).
A majority of analysts expect BoJ Governor Haruhiko Kuroda to go on the record to announce fresh monetary policy easing in response to continued low domestic inflation. Any failure to do this would send the USDJPY significantly lower.
But that said, it isn’t all about the Japanese, and the decisions made by the Fed will also influence the pairing significantly. Although many believe that the Fed won’t alter interest rates until after the US Presidential Election in November, there is a real possibility that a surprise decision could send the pairing skyrocketing.
With that in mind, however, we believe that the easing by the BoJ will be the more significant factor in this pairing. Consequently, we are expecting the USDJPY to trend lower, and are flipping our position to go short in anticipation of this.