USDJPY: BoJ left interest rate at its highest level since 2008

The USDJPY rate has declined, securing below the 152.65 support level. Discover more in our analysis for 31 October 2024

USDJPY forecast: key trading points

• The Bank of Japan left the interest rate at 0.25%, the highest level since 2008
• The US economy grew at a 2.8% annual rate in Q3, slightly below the forecasted 3.0%, with personal consumption and sales figures remaining high
• Investors cautiously await Friday’s US nonfarm payrolls data
• USDJPY forecast for 31 October 2024: 152.40 and 150.80

Fundamental analysis

At its two-day meeting, which concluded on Thursday, the Bank of Japan kept the interest rate at 0.25%, the highest level since 2008. This result aligned with analysts’ expectations that monetary policy would remain unchanged, exerting pressure on the USDJPY rate. This year, the Bank of Japan raised the interest rate twice, in March and July.

BoJ Governor Kazuo Ueda has already warned of increasing uncertainty in the global economy, noting that the regulator has time to thoroughly analyse risks without hastily tightening monetary policy. Traders are now scrutinising information from the BoJ chief’s post-meeting briefing, looking for hints about the timing and pace of further interest rate hikes.

According to the quarterly survey, the Bank of Japan maintains its inflation outlook and expects inflation to remain close to the 2.0% target level in the coming years. The projected core inflation rate, excluding food prices, remains at 2.5%.

Investors are now cautiously awaiting Friday’s nonfarm payroll data and next week’s US presidential election. Meanwhile, the ADP report recorded a surge in private-sector employment in October, indicating labour market resilience. The US economy grew at a 2.8% annual rate in Q3 2024, slightly falling short of the forecasted 3.0%. However, solid growth in personal consumption and high sales figures confirm consumer activity, which may support the US dollar as part of today’s USDJPY forecast.

USDJPY technical analysis

The USDJPY H4 chart shows that the market continues to develop a narrow consolidation range around 153.33 without a clear trend. The range could extend to 154.15, with a decline to 152.40 today, 31 October 2024. A breakout below the range would open the potential for a decline to 150.80, signalling a possible correction. With an upward breakout, the wave could continue to 155.22. Once the price reaches this level, a more substantial correction might begin, aiming for 147.47, with the first correction target at 150.80.

The Elliott Wave structure and wave matrix, with a pivot point at 147.47, technically confirm this scenario for the USDJPY rate. The market has nearly completed the growth structure of the third wave and reached the target of 153.87. A consolidation range is currently forming below this target level. A breakout below the range will be viewed as a rebound from the upper boundary of the price envelope and the beginning of a correction towards its lower boundary. A breakout below the 152.40 level may signal a further correction towards 150.80.

Summary

The Bank of Japan left the key interest rate at its highest level since 2008, supporting the Japanese yen. However, positive Friday’s US employment data may pressure the USDJPY currency pair tomorrow. Technical indicators in today’s USDJPY forecast suggest a corrective wave towards the 152.40 and 150.80 levels.