When is the BoJ and how could it affect USD/JPY?

While the Bank of Japan isn't expected to change its monetary policy, markets are on standby for volatility, all the same, considering a shift in the greenback after last week's nonfarm payrolls and the outcome of the FOMC overnight. The divergence between the two banks has offered support for the dollar above the 111 handle so far this year and the 200 daily EMA at 111.21. Should there be a change to the BOJ's current policy, that would be considered a surprise. 

Under the current framework of the BOJ's QQE with yield curve control, at the January meeting this year, the board at a 7-2 majority vote decided to stick with the overnight call rate at -0.10% and to purchase ETFs and J-REITs.  At the same time, the BoJ's yield curve control objective is to maintain the short-term policy rate at -0.10% while purchasing the Japanese government bonds seeking to keep the 10-year JGB around 0.0%. The ultimate objective while expanding the monetary base, the BoJ seeks to take the year-on-year rate of increases in CPI beyond the price stability target of 2%. The status quo has been helping the Japanese economy to grow although inflation is lagging overall, despite the core consumer prices that had increased 0.1% in January for the first time in 11 months. 

How could the BoJ affect USD/JPY?

The market will be looking out to see hear that the BOJ isn't going to risk the Japanese recovery by tightening its policy too soon and the BoJ's Governor Kuroda will need to communicate clearly in his press conference about the bank's policy approach. The yen could also be a factor that is mentioned. The aforementioned daily 200 EMA is a downside target below the bullish H&S neckline on the daily chart at 111.21. to the upside, 115.49 in the March high and 114.87 is where the dollar dropped its bid after the FOMC. The 20-d sma is located at 113.76 double top 20/21st Feb as initial resistance. 112.80 is key support on the downside for the near term. 

Key notes: 

USD/JPY analysis: bearish momentum set to extend, 112.00 at sight

"The Central Bank is expected to maintain the status quo, focusing on the yield-curve control, whilst Governor Kuroda is expected to maintain its optimist outlook, despite inflation is nowhere near the Central Bank's target,"  - Valeria Bednarik, chief analyst at FXStreet. 

Fed: economy is in line with the FOMC’s forecasts - Nomura

About the BoJ Interest Rate Decision

The BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.