USDJPY Analysis: Calm Before the Storm?

There is some lull (consolidation) in the USD/JPY market, which is evidenced by the width of the Bollinger bands, which dropped to the lows of the end of February on the 4-hour chart. Bank holidays in the US in connection with the celebration of Independence Day contributed to the decrease in volatility.

However, the calm could be replaced by a storm.

The USD/JPY chart shows that the bulls have tested the level of 144 and on the morning of July 5, the rate is gradually rising towards the level of 145 — technically this can be interpreted as a demand force for dollars.

Reuters reports the words of Shusuke Yamada, chief forex strategist at Bank of China, who believes that the market expects further weakening of the yen in the medium term. And this is important, because last fall, the level of 145 yen per US dollar was the trigger for intervention by the Bank of Japan.

Add here the news from the FOMC, which will be released today at 21:00 GMT+3, and you will get a set of drivers that can cause a surge in market volatility in July and an expansion of Bollinger bands.