Nikkei 225: The Decision Is Priced, the Guidance Is NotJapan 225, DailySPREADEX:NIKKEIKrisadaYoonaisilJP225 Ahead of the BOJ: When the Rate Hike Is Already in the Price Fundamental Analysis 1. The Nikkei recently pulled back from 67,461 to 64,214 before a slight rebound. However, because it remains up 32% year-to-date, this is just a normal correction within a strong ongoing uptrend. 2. The BOJ's Sept 17–18 meeting is the primary market catalyst, with an 82% probability of a rate hike to 1.25% already priced in. Since the hike is expected, the index will react to the central bank's tone rather than the decision itself. 3. The yen has strengthened recently (moving from 160.20 to 156.71). This acts as a double-edged sword: it helps lower imported inflation but cuts into the profits of major Japanese exporters. 4. 10-year JGB yields hitting 30-year highs near 3% are pressuring growth valuations while boosting bank margins. This has triggered a clear sector rotation out of tech and into financials and domestic stocks. 5. Oil prices nearing $95 due to geopolitical risks directly increase costs for energy-dependent Japan. This hurts corporate margins and pressures the BOJ to tighten policy faster, creating a dangerous combination for the index. Technical Analysis 6. JP225 is trading sideways within a symmetrical triangle, holding its level after posting a new high above 72,000. The price has pulled back and is now hovering close to the EMA20, indicating a consolidation phase. 7. However, looking at the broader picture prior to this sideways move, the price had been building higher swings consistently, while the EMA stack diverged and continues to signal an uptrend. 8. In summary, JP225 is moving sideways to build momentum for a further advance, as the bullish momentum may have temporarily weakened. 9. If the price breaks out of the range in either direction, it would serve as a trend-following signal in that direction, with an upside bias. Analysis by: Krisada Yoonaisil, Financial Markets Strategist at Exness