On Friday (September 20th) in the Asian market, the USD/JPY fluctuated slightly lower and is currently trading around 142.50. The Bank of Japan's interest rate decision is expected shortly, and the market has a strong wait-and-see sentiment.

The market generally expects the Bank of Japan to keep its policy rate unchanged at 0.25% later on Friday and maintain its view that the economy will moderately recover as wage increases support consumption.

The policy statements of the Bank of Japan may sometimes be quite opaque, so investors will focus on any hints given by Bank of Japan Governor Kazuo Ueda at the post meeting press conference regarding the timing and pace of tightening policies

Samara Hammoud, currency strategist at the Commonwealth Bank of Australia, pointed out that Japan's real interest rates are still deeply negative, at around negative 2.5%, while the Bank of Japan estimates the neutral rate to be between negative 1% and positive 0.5%.

Therefore, while maintaining loose financial conditions, there is still room to further increase policy interest rates, "she said. Our basic estimate is still that the Bank of Japan will raise interest rates by 25 basis points next time in October, although the risk leans towards a later rate hike. Recent financial market volatility and the upcoming Liberal Democratic Party elections may make the Bank of Japan more cautious about rate hikes

Former Bank of Japan official Nobuyasu Atago said, "The Bank of Japan just raised interest rates in July, and now it may be more interested in carefully observing market trends." He said, "It is natural to think that the next interest rate hike will be in December," because the Bank of Japan can assess the impact of political events such as the Federal Reserve's interest rate cut, the leadership election of the ruling Liberal Democratic Party, and the US presidential election.

Most economists surveyed by Reuters expect the Bank of Japan to raise interest rates again this year, with most betting that the central bank will raise rates in December and no one predicting a rate hike this month.

The Bank of Japan ended its negative interest rate policy in March and raised short-term interest rates to 0.25% in July, marking a milestone shift from its 10-year stimulus plan. The central bank or Kazuo Ueda emphasized that if the inflation rate continues to stabilize and reaches the target of 2% (as currently predicted by the central bank's policy committee), the central bank is prepared to further raise interest rates.

Overall, the Federal Reserve has initiated a rate cut cycle, and the market expects the Bank of Japan's interest rates to remain unchanged this week. However, the Bank of Japan's governor may remain hawkish and leave, and the Bank of Japan may raise interest rates again in October, leaning towards supporting the yen. The tense geopolitical situation in the Middle East and the uncertainty of the US presidential election also support safe haven buying demand for the yen.

Technical aspect: At the daily level, it rose and fell back on Thursday due to resistance from the Bollinger Bands' middle track and the 21 day moving average, indicating strong resistance above and disrupting the rebound trend since 140. But MACDA and KDJ are still golden crosses, and there are still variables in the short-term trend. Pay attention to the support near the 5-day moving average of 142.02.

4 hours: Locally similar to the M top, MACD has a dead cross trend, KDJ has a dead cross, short-term upward momentum disappears, and downward risk increases. Pay attention to the support near the middle of the Bollinger Bands at 141.68. If it falls below this level, it may fall below the 140 level again, or even near the lower of the Bollinger Bands at 139.45. The resistance of the 5-line moving average is around 142.83, and the resistance of the 100 line moving average is around 143.24. If it can break through this resistance, it will increase the bullish signal for the future.

1 hour: The Bollinger Bands close, pay attention to the breakout situation in the 142.10-143.66 area of the Bollinger Bands. There is resistance near 142.53, and if it breaks through this position, it weakens the short-term bearish signal. However, it is necessary to break through the middle of the Bollinger Bands at 142.88 in order to be bullish.

It is worth mentioning that the Bank of Japan unexpectedly raised interest rates last time. After a short-term drop of 100 points, the exchange rate quickly rose by 200 points and then fluctuated and weakened, falling from 153 to 141.68 for 4 days. The lowest point of the day was around 149.6, about 300 points lower.

At present, there seems to be buying support for the USD/JPY around 142.10, with the following buying support below. If it falls below the 142 level, it may accelerate the decline.