- USD/JPY keeps post-BOJ rebound as Governor Haruhiko Kuroda shows readiness for further easing.
- Hopes of firmer growth jostle with hints of rising inflation expectations in BOJ Governor Kuroda’s press conference.
- BOJ left monetary policy unchanged but quarterly economic outlook report seemed downbeat.
- US dollar remains pressured ahead of ECB, risk appetite dwindles even as yields rebound.
USD/JPY prints mild gains around 138.30 as Bank of Japan (BOJ) Governor Haruhiko Kuroda tried to resell monetary easing in his speech on early Thursday in Europe. In doing so, the yen pair holds onto the post-BOJ rebound amid the market’s cautious optimism.
BOJ Governor Kuroda repeated his pledge while saying that (He) won't hesitate to ease monetary policy further if necessary. “Risks to economy skewed to the downside for time being but will be balanced thereafter,” adds BOJ’s Kuroda.
Earlier in the day, the Bank of Japan (BOJ) matched market expectations by announcing no change in the current monetary policy. In doing so, the Japanese central bank kept the benchmark rate unchanged at -0.10% while keeping the target rate for the Japanese Government Bonds (JGBs) at 0.0%. However, the quarterly release of the BOJ Outlook report does cite the inflation fears and weighs on the yen. Also favoring the USD/JPY buyers are the downbeat GDP forecasts, as well as expectations of higher CPI, within the stated report.
The yen also justifies its risk barometer status as the market sentiment recently improved after the restoration of the gas flows from Russia’s Nord Stream 1 pipeline. It’s worth noting that the US dollar’s weakness ahead of the European Central Bank (ECB) monetary policy meeting appears to challenge the USD/JPY bulls.
On the contrary, firmer US Treasury yields seem to favor the pair buyers as the US 10-year benchmark rise 1.3 basis points to 3.05% to refresh its one-week high.
Looking forward, markets are likely to witness the pre-ECB anxiety and may challenge the USD/JPY traders. However, any surprises from the bloc’s central bank shouldn’t be taken lightly.
Technical analysis
Unless breaking a five-week-old support line and the 21-DMA, respectively around 137.50 and 136.70, USD/JPY remains on the road to the 140.00 psychological magnet.
