Dovish Ueda to maintain the dovish Bank of Japan stance

  • Easing set to continue at Friday’s BoJ meeting: Ueda says that “our stance is to continue” 
  • JPY finds support: The JPY is performing well today on major forex despite the dovish comments
  • Equities turn lower: European indices move lower in early moves, US futures fall back after a late rebound into the close on Friday.
  • Metals and oil fall: In commodities, risk aversion is weighing on metals and the oil price.

Don’t expect any fireworks at Friday’s BoJ meeting

The New Governor of the Bank of Japan was answering questions in the Japanese Parliament on Monday. 

He laid the foundation for a continuation of the long-held dovish monetary policy at Friday’s Bank of Japan meeting.

More of the same, at least for now

Friday is Kazuo Ueda’s first meeting as the Bank of Japan Governor. 

He said in Parliament:

“Our stance is to continue with monetary stimulus along with our price outlook.”

Inflation remains elevated in Japan and on Friday core inflation was at 3.1%, around levels of the highest since 1981.

Inflation remains elevated in Japan

However, this period of high inflation is not expected to last. 

Ueda said that he believes inflation is expected to cool back below 2% later in the fiscal year ending March 2024.

The Bank of Japan needs trend inflation to be “quite strong and close to 2%” to consider changes to monetary policy. 

They see trend inflation currently below 2%.

Are changes coming?

The Bank of Japan has been the last major central bank to exit its ultra-easy monetary policy. 

However, they are starting the process of how it would happen. 

The Bank of Japan owns vast amounts of Exchange Traded Funds and government bonds. Phasing out its policy of Yield Curve Control will be the first move to make.

The groundwork is being done at the BoJ on how the exit will be undertaken, but formal discussions are yet to take place at a committee level.

Ueda’s comments are in keeping with his recent stance and come as little surprise. 

JPY supported by negative risk appetite

Confirmation of the dovish stance would normally be seen as being negative for the JPY, but there is a broad hint of risk aversion in major markets today.

This is restricting any JPY selling and has helped to support it in the early moves of Monday’s European session.

JPY supported by negative risk appetite

However, JPY remains the weakest performing major currency of the past month, by some considerable way.

Technicals show JPY crosses at key resistance

The JPY has been under selling pressure for several weeks. However, notably, there is a stalling around key resistance on crosses such as EUR/JPY and GBP/JPY.

For now, the outlook for these crosses remains positive (so JPY negative).


The pair has rallied once more to the top of a broad trading range. 


However, the move is stalling around the key resistance and an uptrend is being tested.

The pair has rallied once more to the top of a broad trading range.

This leaves the outlook at a key crossroads:

  • Resistance at 147.85/148.40 is crucial – this is now the key barrier to gains.
  • The daily RSI is consolidating in the mid-60s – upside momentum could be easing.
  • A one-month uptrend is supportive at 146.90 today – this is the initial gauge of the run higher.

Reaction to Friday’s low at 146.40 will now be the telling move – a close below would turn the market corrective for a retreat back toward 145.40/145.65 support.


There has also been a strong run higher on GBP/JPY recently. 

This move has continued an uptrend channel of the past four months, in a run of higher lows and higher highs.

There has also been a strong run higher on GBP/JPY recently.

Friday’s initial pull lower found buyers into the close.

The outlook remains positive and weakness seemingly continues to be seen as a chance to buy.

  • There is good support initially between 165.45/166.05 which is an area of old breakout highs that have become support in the past two weeks.
  • Momentum is strong with the daily RSI turning up in the mid-60s today.

The key gauge for this week will be the 165.45/166.05 support. If this is broken it would signal a key near to medium-term shift in outlook.

Resistance is at 167.97 and then the December high at 169.27.

Support and resistance levels for Forex, Commodities, and Futures/Indices 

EUR/USD R2 1.1035
R1 1.0999
S1 1.0965
S2 1.0937


R2 1.2545
R1 1.2474
S1 1.2366
S2 1.2344
USD/JPY R2 134.82
R1 134.49
S1 133.89
S2 133.55


R2 2008
R1 1998
S1 1969
S2 1950


R2 25.38
R1 25.13
S1 24.78
S2 24.64
Brent Crude Oil
R2 82.55
R1 82.05
S1 80.25
S2 78.15


S&P 500 futures
R2 4173
R1 4160
S1 4133
S2 4124
DAX Index 
R2 15,958
R1 15,940
S1 15,869
S2 15,751
FTSE 100 Index
R2 7933
R1 7917
S1 7868
S2 7844

Data: MT5/IXOne

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