The Japanese Yen struggled to find demand on Friday as markets weighed the Bank of Japan’s (BoJ) policy announcements. The currency dropped toward its lowest levels since November 2022 after the Bank of Japan maintained its ultra-dovish policy.
The Japanese yen dropped 0.45% to 148.23 against the dollar.
The Bank of Japan maintained short-term rates at negative 0.1%, and said it will continue with its monetary easing and yield curve control policies to foster economic growth.
The bank cited increased uncertainty over the Japanese economy, especially due to weakness in its biggest trading partners, as the main reason for maintaining its stimulative policies. The BOJ also said it will continue to target more wage growth and aim to help inflation reach its 2% annual target.
The decision came just a few hours after data showed Japanese consumer price index inflation grew slightly more than expected in August. A core reading, which excludes fresh food and fuel prices, remained pinned at an over 40-year high.
The BOJ statement disappointed some investors hoping for more cues on a potential pivot away from negative rates, given that Governor Kazuo Ueda had recently said that the bank had enough data to consider such a move.
Further, the US. Retail Sales Canada and comments from central bank officials will focus today which will add some clutter for the currency.
Technical Outlook
The USDJPY pair traded at 148.20 up 0.44% today. The currency pair jumped to the highest levels 148.4180 since November 2022.
On the above chart, USDJPY is trading above its 20 SMA and forming a long bullish candlestick at the same time. Further, the pair is trading near to three day’s consolidation resistance and a break above will extend recent gains. And it could test the next resistance 149.30-150.20 very soon.
RSI 14 is still giving a positive cross over which also weighting on the positive sentiment.
On the downside, crucial support seen at 146.80 will act as an immediate support and a break below will bring some correction and the pair could retreat towards 145.50-144.60.
Overall trend is bullish for a short time.