Ahead of the Bank of Japan's monetary policy meeting, downside caution has intensified in cryptocurrency markets, including XRP. A hold is the prevailing expectation, but depending on the statement and inflation outlook, the battle around $1.26 could resume.
Caution is rising in cryptocurrency markets, including XRP, ahead of the Bank of Japan's October meeting. Markets broadly expect the policy rate to be maintained, but if the statement or inflation outlook is more hawkish than expected, XRP may be forced to test the $1.26 level.
Markets see a high probability that the Bank of Japan will maintain its policy rate at its 29–30 October meeting. However, a signal hinting at an additional rate hike could weigh on cryptocurrency prices. The market is pricing in an approximately 96% probability that the policy rate will remain at 1.25%. The Bank of Japan raised rates by 25 basis points at its previous meeting in September, and the prevailing view is that this meeting will focus on assessing the impact.
Attention has shifted to the tone of the statement and the inflation outlook. Japan's September CPI was 2.1%, above the Bank of Japan's 2% target, and some have suggested that expectations for an additional rate hike in December could revive depending on the October outlook. Some market participants also see a rate hike to 1.50% as possible at the 18 December meeting. Technically, XRP is showing a double-top formation and a MACD sell signal, and is currently trading around $1.27.