Analysis of the Franc-Yen Pair

The Franc-Yen Pair from an Economic Perspective

The Bank of Japan raised interest rates for the first time since last December, increasing the benchmark rate to 1% from 0.75%.

This move was widely anticipated by economists and investors.

The Bank of Japan voted 7 to 1 in favor of raising interest rates, as policymakers grew increasingly concerned that rising energy prices could keep inflation higher than expected.

In its statement, the Bank of Japan warned that core inflation could exceed its 2% target. In other words, prices may continue to rise at a faster pace than officials would like, forcing them to continue monitoring monetary policy tightening.

Consequently, the yen was not significantly affected by the rate hike, especially since this move came as no surprise to anyone.

On the other hand, markets are awaiting tomorrow’s Swiss interest rate decision, with expectations that rates will remain at zero.

The Swiss Franc from a Technical Perspective 

The CHF/JPY pair is trading within an upward price channel on the four-hour chart, where we expect the pair to experience some downward pullbacks under the influence of the negative divergence in the MACD indicator.

We are targeting the 201.50 and then 200.50 levels. Any rally toward the upper boundary of the price channel is expected to present another good selling opportunity.

This scenario would be invalidated if the pair breaks above the 204.20 level.