Forex Trading | Is BOJ’s Policy Maintaining Pressure on Japanese Yen?

Forex Trading | Is BOJ's Policy Maintaining Pressure on Japanese Yen?

The USD/JPY witnessed an meaning full recovery from the day’s lows in latest forex trading. The pair traded near to its previous week high following the Bank of Japan monetary policy announcements.

USD/JPY surged 0.85% to 150.4350 crossing the widely-watched 150 level once more, putting potential government intervention into the spotlight once more. The yen reacted negatively as the decision disappointed market participants hoping for a more hawkish move. Benchmark 10-year yields on Japanese government bonds trimmed some gains after the decision.

The Bank of Japan kept its short-term interest rate at -0.1%, and said it will use the upper end of its YCC band- 1% as a reference cap for its market operations. The move reflects a slight change in the BOJ’s messaging around its otherwise strict YCC policy, and could reflect some more flexibility.

The BoJ left the policy settings unchanged after the October meeting remained in line with market expectation of the market, maintaining the interest rate and the 10-year Japanese government bond (JGB) yield target at -0.1% and 0%, respectively in latest forex trading session.

Few experts were anticipating the Bank to lift the 10-year yield ceiling from 1% to 1.25% after strong inflation readings. “The Bank will maintain the target level of 10-year Japanese government bond (JGB) yields at around zero percent, it will conduct yield curve control with the upper bound of 1.0% for these yields as a reference and will control yields mainly through large-scale JGB purchases and nimble market operations,” the BoJ said in its statement.

Forex Trading | Technical Outlook

The USD/JPY pair rebounded from the day’s low 149.001 and traded at 150.41, up 0.92%. The pair moved near to its previous week high following the BoJ policy decision.

On the above chart, the USD/JPY pair found support for two-week consolidation support. Further, as per the Elliot wave drawn on the chart, the pair is constructing 5th impulsive wave that might complete around 151.50 levels.

Alternatively, on the downside crucial support intact at 148.50 and a break below will create a probability for failure of this impulsive wave, and the pair could retreat towards 147.20-145.80.

Overall trend could remain bullish on the USD/JPY pair. Further, US Federal Reserve and Bank of England policy decisions will drag some volatility in the pair.

Commodity Samachar
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