Amid the release of the Bank of Japan meeting minutes and the US Federal Reserve rate decision, the USDJPY pair may continue to rise to the 156.00 resistance level. Discover more in our analysis for 29 January 2025.
USDJPY forecast: key trading points
- Minutes of the Bank of Japan monetary policy meeting
- The US Federal Reserve interest rate decision
- USDJPY forecast for 29 January 2025: 156.00 and 154.20
Fundamental analysis
Fundamental analysis for 29 January 2025 takes into account that the BoJ released the minutes of its December 2024 monetary policy meeting today. During the discussions, Board members focused on assessing the economy’s neutral interest rate to determine the timing of future rate hikes.
One of the meeting attendees noted that the current rate is well below the neutral level and needs to be timely raised. Another one expressed doubts about the use of data from Japan’s long-term deflation period to assess the timing of future rate hikes.
Despite keeping the interest rate unchanged in December due to uncertainty about the US economic policy and wage dynamics, the BoJ raised the rate already in January, which significantly impacted the USDJPY rate.
Market participants continue to monitor the Bank of Japan’s neutral rate estimates, which, according to analysts, ranges between 1% and 2.5% although many believe it is closer to 1%.
The USDJPY forecast takes into account that the US Federal Reserve will decide to change the interest rate today. At this stage, analytical agencies are inclined to believe that the interest rate may remain unchanged at 4.5%, and if the actual reading turns out to be different, this will increase volatility in the market.
USDJPY technical analysis
Having tested the lower Bollinger band, the USDJPY price has formed a Hammer reversal pattern on the H4 chart. At this stage, it continues its ascent following the pattern signal. The uptrend will likely continue as the price has rebounded from the support level and is moving within an ascending channel.
The growth target could be the 156.00 resistance level. A breakout above this level could pave the way for a more substantial upward movement.
However, an alternative scenario is possible, where the price corrects towards 154.20 before rising further.
Summary
The release of the BoJ meeting minutes helped slightly strengthen the yen, while the Fed interest rate decision may radically change the situation. The USDJPY technical analysis suggests that the price could head towards the 156.00 resistance level.
Source: Roboforex
