BOJ EXPECTED TO RETAIN STATUS QUO
The Japanese Yen may continue to climb higher against its major counterparts in the coming days, as the Bank of Japan is expected to keep its monetary policy levers steady at its upcoming meeting on October 29.

The BoJ’s highly anticipated Quarterly Outlook Report is expected to show Japanese policymakers revising down their growth and inflation outlooks for 2020, with Prime Minister Yoshihide Suga’s newly introduced “Go to Travel” campaign – offering government’s subsidies for domestic travel – probably cited as one of the major hinderances on consumer price growth.

Consumer prices remained unchanged for the first time since late 2016 in September, while the core inflation rate came in at -0.3%.

Although the central bank has stated that it “will not hesitate to take additional easing measures if necessary”, recent economic and health developments suggest that the need for further monetary support may not be as intense as previously thought.

The number of new daily coronavirus infections has notably stabilized since peaking in early August, while the nation’s composite PMI is expected to show the economy is continuing to recover from the record contraction in output seen in April.

Therefore, the Japanese Yen may outperform its major counterparts in the near-term, if the nation’s current state of affairs encourages the BoJ to retain its wait-and-see approach to monetary policy.

USD/JPY DAILY CHART – DESCENDING SCHIFF PITCHFORK GUIDING PRICE LOWER
From a technical perspective, the path of least resistance for USD/JPY rates remains skewed to the downside, as price continues to track below all four moving averages and within the confines of a Descending Schiff Pitchfork.

The development of the RSI and MACD indicator are indicative of swelling bearish momentum, as both oscillators continue to travel firmly below their respective neutral midpoints.

With that in mind, a push to fresh monthly lows could be on the cards, with a daily close below the September low (104.00) needed to signal the resumption of the primary downtrend and bring the psychologically pivotal 103.00 mark into focus.

Conversely, USD/JPY could rebound back towards the 21-DMA (105.11) and pitchfork 50% line, if buyers can hold price above support at the 2019 low (104.45).

Reference by: Daniel Moss, Analyst for DailyFX