Here's the scoop: The Bank of England (BOE) is set to accelerate the pace at which it shrinks its balance sheet, according to one of its deputy governors. Currently, the BOE is unwinding about £20 billion of quantitative easing every three months. The goal is to reduce the stock by around £80 billion per year through active sales and maturing assets.
How Will BoJ Meeting Affect the Yen
2023-05-01 • Updated
Hold onto your hats, folks! The Japanese yen took a nosedive after the Bank of Japan (BOJ) left its ultra-loose policy settings unchanged, including its closely watched yield curve control (YCC) policy. But wait, there's more! The BOJ also removed its forward guidance, which had previously pledged to keep interest rates at current or lower levels. So, what's the scoop? Market expectations had been subdued going into the meeting, but some were still hoping for tweaks to the forward guidance to prepare for an eventual exit from the bank's massive stimulus. And while the options market was positioned for hawkish outcomes, the BOJ is no stranger to surprises - just ask those caught off guard by their December rate decision. So, what's next? Let's see what the price action looks like.
USDJPY - Daily Timeframe
USDJPY could be on the verge of a reversal, and the reasons are not far-fetched. First, the price is trading within the rally-base-drop on the Daily timeframe while approaching the 200-Day Moving Average. Finally, the price is also retesting the trendline resistance of an ascending channel pattern. Moreover, the supply zone rests on 88% of the Fibonacci, which could be an added confluence towards the bearish reaction.
GBPJPY - Daily Timeframe
Based on the price action from the charts, one could almost call USDJPY and GBPJPY an identical twin. Just like we saw on the USDJPY, the rally-base-drop supply zone is also supported by the resistance trendline of an ascending channel. The only difference, however, is the position of the 200-Day Moving Average. However, the conclusion is that we can expect to see a bearish reaction from the marked supply zone.
AUDJPY - Daily Timeframe
AUDJPY presents an interesting trading sentiment. Here we see the price steadily approaching the key level at the highlighted supply zone. The best part to note is meeting the two resistance trendlines on top of the supply zone. Remember, the 200-Day moving average is also acting as a resistance at the same region. I bet we will see a good deal of reaction from that zone soon.
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