All jokes aside, there is still a danger to USDJPY
Ok, we've had some fun with the BOJ this morning but there's a serious matter to attend to.
The problem with having the BOJ announcement so close to the FOMC is that it can create a false image. USDJPY went down, then went up, then went down again to where we are now. That doesn't mean it's the end of the story.
I mentioned yesterday that traders may not want to drive or let the price go too far while the Fed risk is still on the table. That risk means that some reaction to the BOJ might be held back until after the Fed.
Bar the BOJ blip to 101.03, the area ahead of 101.00 (101.10/15) still looks like it could offer support.
USDJPY H1 chart
We may also see minor support under the big figure at 100.85/90 and then 100.60, which was resistance around 24/25 Aug before the break higher. It's another minor level. I also mentioned that we shouldn't expect huge moves on what is just a monetary policy announcement where they are just tinkering with policy. The range over the BOJ from top to bottom was 176 pips. If we stay above 101.00 into the Fed then the 100 mark is going to be a big level for any disappointment, and far enough away that it may be the strongest stretch point.
The FOMC announcement will be judged in its own right but don't overlook the fact that it still might bring extra moves to USDJPY, if there's traders holding back on BOJ trades for now. It may not play out in one hit but it could mean that we see a sustained direction over the following days.
The chances are that the Fed stay on hold and trot out the usual crap and keep a hike on the table for Nov or (more probably) Dec. That might take some bearish pressure off but it may not last. The perfect storm for this pair would be a very dovish Fed.
