USD/JPY: forecast for June 15-21
USD/JPY fell to 122.45 at the beginning of the week as the Bank of Japan’s Governor Kuroda said that Japanese currency has become “too week”. As traders were waiting for some verbal interventions from the Bank of Japan to drive the pair down and as USD/JPY was overbought, the decline was sharp. However, the predominant view among the analysts is that Japanese central bank is actually comfortable with the current levels of the pair and realizes that given the divergence in monetary policy between the US and Japan, it will be useless to try to stop dollar/yen’s advance. In addition, the Bank of Japan does need weaker yen to bring inflation to the target level.
On Wednesday pay attention to Japanese trade balance. The Bank of Japan’s meeting will take place on Friday. No changes in policy are expected, but there may be important comments during the press conference. The Federal Reserve’s meeting on Wednesday will also be an important driver of the pair.
USD/JPY corrected down 50% of its advance since the middle of May. Resistance is at 124.20, 125.00 and 126.00. Support is at 122.30, 122.00, 121.55 and 120.50.