USD/JPY sent for a spin but now moving higher as BOJ rate hike odds fade

This isn’t quite the usual lull ahead of any US CPI report. First, we had China news helping to keep things interesting before the latest headlines on the BOJ here. It is being reported that while some policymakers might be in favour of a December rate hike, they see little need to rush things as they view “little cost” in waiting to execute that action.

The rate hike odds for the BOJ this month were already low to begin with. But they were about ~30% coming into today. That has now dwindled further to ~23% after the headlines here.

In turn, that has seen USD/JPY catch a bid with the Japanese yen losing ground. The initial algo spike saw USD/JPY drop to a low of 150.99 but the pair is now trading back up to 152.30 levels on the day.

In the bigger picture, it’s a key jump for USD/JPY from a technical perspective:

The pair is now making a push back above its 200-day moving average (blue line) of 151.98. And that will give buyers some added incentive to stick with a further rebound towards the end of the week.

This article was written by Justin Low at www.forexlive.com.