FxWirePro: USD/JPY softens as Middle East risks cloud BOJ decision

•  USD/JPY eased slightly on Wednesday  as investors weighed the Bank of Japan’s policy outlook ahead of its meeting next week.

• The Bank of Japan is likely to hold off raising interest rates next week    as fading prospects of a near-term end to the Middle East war keep the country's economic and price outlook highly uncertain.

• The protracted Middle East conflict has complicated the BOJ's plan to push up still-low borrowing costs with surging oil prices adding to mounting price pressures, while threatening to hurt an economy hugely reliant on imported fuel from the region..

• The BOJ ended a decade-long, massive stimulus in 2024 and raised interest rates including in December on the view that Japan was making progress in durably hitting its 2% inflation target.

• Governor Ueda has signalled the bank's readiness to keep raising rates if its economic and price projections materialise, but has offered few hints on the pace and timing of future rate increases.
 
•  Immediate resistance is located at 159.66(April 21st high), any close above will push the pair towards 160.21(Higher BB).

• Support is seen at 158.79 (38.2%fib) and break below could take the pair towards 158.36(Lower BB ).

Recommendation: Good to buy  around 158.90, with stop loss of 158.00 and target price of 159.60