Traders are watching the currency market very closely as the USD/JPY exchange rate continues to hover around the 143.00 level. All eyes are now on the Bank of Japan’s (BoJ) monetary policy decision due by the end of this week. That decision is expected later this Thursday. Overall market sentiment is decidedly risk averse. A lot of traders are waiting on the sidelines until the central bank makes its first announcement on what policy changes they’re making.
Ultimately, the last two days provided a nice reprieve for USD/JPY bulls, but they were unable to hold ground. FX analysts suggest the currency pair is coming to a short-lived halt. Traders are now attempting to price in the various scenarios resulting from the BoJ meeting. Attention now turns to how the Federal Reserve will address persistent inflationary pressures. This may not seem like a major decision, but it will affect the future of the Japanese economy.
Throughout the trading session, current market participants express their thoughts on competing issues. They underscore what this could mean for the BoJ’s recent and wholly unexpected pivot. Most importantly, there is a widespread expectation that the central bank will make further changes to its monetary policy based on evolving economic indicators. Until something official is communicated, speculation rules.
Brokers to trade EUR/USD
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With heightened volatility leading up to the next BoJ meeting, all FX traders should be aware of the fundamental and technical forces at play when currencies move. All analysts agree that getting a read on market sentiment and economic fundamentals is key to placing smart trades.
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Further out, as we get closer to Thursday, look for increasing volatility in the market. Investors will likely overreact to news and analysis indicating policy direction from the BoJ. The financial community is still on the lookout for any changes that can come from Japan’s economic climate.
Investors are further reminded that investing in open, highly competitive markets involves substantial risks. “Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility,” serves as a cautionary reminder to approach trading with due diligence.