Morning Note: BoJ Holds Rates, Fed Decision Looms & Tencent Earnings in Focus

BoJ Holds Rate Steady at 0.50%

On Wednesday, the Bank of Japan held interest rates steady, opting to take a little more time to judge how U.S. tariffs would impact the country’s export-driven economy. The decision was made public on Wednesday, and concerns grew that US President Donald Trump’s tariffs could slow down the global economy and outweigh recently released wage and price data, which suggested that Japan was moving toward the BOJ’s 2% inflation target. Investors now look toward Governor Kazuo Ueda’s briefing after the meeting for clues on when the next rate hike might happen as stable domestic data and uncertainty over U.S. tariffs complicate the decision.

(USD/JPY Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the USD/JPY currency pair has been in a bearish trend since the beginning of January 2025, as indicated by lower highs and lower lows. Recently, it found support, rebounded from the lower boundary of the descending channel, and is now retesting the swap zone of 149.30 – 149.80. If it can break above this level, there is a high probability that it will continue rising to retest the resistance zone of 150.80 – 151.30.

Will the Fed Keep Interest Rates Steady?

The Federal Reserve's interest rate is expected to remain at 4.5% for the announcement made on the 19th of March at 18:00 GMT. The interest rate will likely remain the same as it navigates the delicate balance between curbing inflation and sustaining economic expansion. On the other hand, the strong employment market lowers the urgency to reduce the rates. Because of these factors, it is highly likely that the Fed will not make any further changes until more concrete signs appear for increased economic stagnation or lowered inflation rates.

(U.S. Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of the U.S. Dollar Index has been bullish since the end of September 2024, as indicated by the formation of higher highs and higher lows. However, the index began to decline in early February 2025, marked by a significant double-top candlestick pattern.

Recently, the strong downward momentum has pushed the price lower, signalling a valid trend reversal from bullish to bearish. The index is currently testing the support zone of 103.00 – 103.20 once again. If it finds support here, it may potentially rebound and retest the swap zone of 104.00 – 104.30. Conversely, a decisive break below this support zone could lead to further declines.

Investors Eye Tencent Earnings Report

Tencent Holdings is scheduled to release its quarterly earnings report today, March 19, 2025, at 12:00 GMT. Analysts anticipate strong financial performance, with a consensus earnings per share (EPS) estimate of 5.95 HKD, up from 5.26 HKD in the same quarter last year. This optimism is bolstered by Tencent Music Entertainment's recent report of an 8% increase in quarterly revenue, driven by higher streaming demand. Additionally, the resurgence in Chinese equities, particularly in the tech sector, has positively influenced investor sentiment toward companies like Tencent.

(Tencent Share Price Weekly Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of Tencent's share price has remained bullish since Nov 2023, as indicated by the higher highs and higher lows. Recently, the price action has broken above the swap zone of 60.60 – 62.20, retested it, and found support, continuing to rebound and surge upwards. This valid bullish structure may potentially lead the price to retest the gap area at 72.80 – 74.20.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.