Earlier today, the Bank of Japan announced the end of its negative interest rate policy. This marks the first time the policy rate has increased since 2007. Currently, the policy rate ranges between 0% and 0.1%.

Furthermore, the bank eliminated yield curve control and adjusted its asset purchases, while continuing to buy JGBs at similar levels as before.

The bank did not provide sufficient guidance on future rate hikes, leading the market to view it as a dovish rate hike, causing USDJPY to rise above 150.0 once again.

RBA left its policy unchanged

The Reserve Bank of Australia has left its current policy unchanged, keeping the cash rate target at 4.35%.

However, the bank removed the sentence mentioning further rate hikes and instead stated that the board cannot rule out anything going forward.

As a result, the Australian dollar (AUD) decreased in value across the board, causing AUDUSD to lose almost all its gains from the previous week and trade near the 0.6500 support level.

Focus remains on the Federal Reserve

Despite the recent volatility caused by the decisions made by the Bank of Japan and the Reserve Bank of Australia earlier today, volatility might decrease in the coming hours and markets will trade within a narrow range once again. All the attention is now directed towards the Federal Reserve decision tomorrow.

The US Dollar Index is currently trading above the 103.65 resistance level. It is important to monitor closely in the coming days. A weekly close above this resistance could lead to a significant shift in the current trend.

Brent crude over $87

Brent crude broke out last week, leading to a rally reaching $87.13 yesterday, almost 800 pips since the bullish call on January 18th.

In the meantime, any downside retracement is likely to remain limited to above $84, which is the top of the breakout range. On the upside, the next resistance level stands at $87.80.

USDCAD awaits inflation data today

During the US trading session, currency traders will be closely watching Canadian inflation data, which is likely to have a significant impact on CAD pairs.

Indicator Forecast Prior
CPI MoM 0.6% 0.0%
CPI YoY 3.1% 2.9%
Core CPI Median YoY 3.3% 3.3%

 

Earlier this morning, USDCAD broke through its resistance level of 1.3565 due to broad USD buying. Consequently, it surged towards the resistance area of 1.3570. However, if the inflation data released later today is higher than expected, it could reverse the upward trend.

The current uptrend is likely a temporary rebound before the continuation of the downtrend, according to the time/price method.

 

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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