The Bank of Japan has now signaled that the era of deflation is coming to an end, leading to a market consensus that this week's interest rate decision will mark the end of the negative interest rate policy.
Additionally, the ongoing employer-union negotiations in Japan for the past two weeks could conclude this week, and significant wage increases could trigger inflation in Japan.
Contrary to expectations, in this week's Bank of Japan interest rate decision, we may see interest rates pulled from -0.10 to 0 or strong signals of this in the meeting minutes. This situation could trigger a rapid rise in the Yen.
Signals given in recent weeks and the expectations set by the union negotiations in the market had caused the Japanese Yen to gain value rapidly. Technically, we are observing a correction of this value gain in the charts.
On the EurJpy H4 chart, we see that the price breaking the uptrend has approached the 38.2% initial correction level but started the correction rise without testing this level and tested the trend channel. The correction movement continued until the intersection of the broken trend channel and the 100-day moving average. This price level also coincides with the 61.8% main correction level of the recent downward movement.
Although the price has not yet technically signaled a continuation of the decline at these levels by facing strong resistance, this intersection of three important resistance levels is a significant level to take a short position.
You can try a sell trade by keeping your stop-loss level above the 0.764 Fibonacci level. We recommend keeping your trade volume low on Tuesday in anticipation of an unexpected decision from the BoJ. Our first TP target level is the main trend's 38.2% level, which the price has not yet reached. If the BoJ gives a signal in line with our expectations or ends the negative interest rate, we could see a quick drop to the 61.8% level.
Additionally, the ongoing employer-union negotiations in Japan for the past two weeks could conclude this week, and significant wage increases could trigger inflation in Japan.
Contrary to expectations, in this week's Bank of Japan interest rate decision, we may see interest rates pulled from -0.10 to 0 or strong signals of this in the meeting minutes. This situation could trigger a rapid rise in the Yen.
Signals given in recent weeks and the expectations set by the union negotiations in the market had caused the Japanese Yen to gain value rapidly. Technically, we are observing a correction of this value gain in the charts.
On the EurJpy H4 chart, we see that the price breaking the uptrend has approached the 38.2% initial correction level but started the correction rise without testing this level and tested the trend channel. The correction movement continued until the intersection of the broken trend channel and the 100-day moving average. This price level also coincides with the 61.8% main correction level of the recent downward movement.
Although the price has not yet technically signaled a continuation of the decline at these levels by facing strong resistance, this intersection of three important resistance levels is a significant level to take a short position.
You can try a sell trade by keeping your stop-loss level above the 0.764 Fibonacci level. We recommend keeping your trade volume low on Tuesday in anticipation of an unexpected decision from the BoJ. Our first TP target level is the main trend's 38.2% level, which the price has not yet reached. If the BoJ gives a signal in line with our expectations or ends the negative interest rate, we could see a quick drop to the 61.8% level.
Trade closed: stop reached:
The price surpassed the resistance area as the BoJ decision did not meet expectations. We will re-evaluate the latest data and publish a new JPY analysis.
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The price rose to the resistance zone to test the broken uptrend line. We expect a downward movement in the price with the BoJ interest rate decision and monetary policy minutes to be announced tomorrow.