USD/JPY

Today, the Bank of Japan will announce its monetary policy plan. It's a challenging day for market participants, as the central bank might implement various tightening measures. The most impactful plan would be a rate hike combined with a reduction in the balance sheet or, more precisely , reducing the volume of bonds purchased for the balance sheet. Although this is unlikely, alternatives involve a rate hike with dovish or hawkish rhetoric, a balance sheet reduction with various additional messages, or even just a hawkish verbal intervention. We lean towards the idea that the BOJ will likely announce a reduction in government bond purchases without changing the rate, as the central bank has already indicated. However, this alone should be enough to ensure the yen does not weaken and negate the central bank's intervention efforts.

At 151.95, the low of July 25, there is support from the weekly MACD indicator line.

A break below this line will intensify the pair's decline, first towards the range of 150.83-151.23 and then to 148.82 – the low of October 30, 2023. A correction is possible from this level, as the Marlin oscillator will be in the oversold zone.

On the 4-hour chart, the price has settled below the MACD line and the target level of 153.60. The Marlin oscillator appears to be in the negative zone. We await further developments.