The Japanese Yen weakened against the dollar last week and settled at 135.8. Yen continued pressurizing after BOJ Governor in waiting Kazuo Ueda torpedoed bets for a policy pivot under his regime
And backed the central bank’s current dovish monetary policy measures. Amid expectations that four-decade high inflation isn’t likely to stick around for very long. USD/JPY jumped 0.92% to 135.16 yesterday.
At his confirmation hearing on Friday. Kazuo Ueda signaled that he was in no rush to abandon . The BoJ’s yield curve control designed to keep Japanese government bond yields capped at a defined target level. And added that it was appropriate to stick with BoJ’s dovish monetary policy measures.
Ahead of his hearing, some market participants had high hopes. That Ueda would follow up outgoing BoJ governor Haruhiko Kuroda’s recent tweaks to the central bank’s yield curve control program with a hawkish pivot.
Earlier this year, Kuroda, whose term ends in April. Said the BoJ would allow its 10-year Japanese government yields to rise as much as 50 basis points, or 0.5%. Up from a previous cap of 0.25bps, stoking debate on whether the move would mark a regime shift for the dovish-leaning BoJ.
Ueda suggested that another clear step up in the inflation outlook would warrant a rethink of yield curve control or return to normal policy. But added that inflation, which is rising at its fastest pace since September 1981, had likely peaked. And would take “some time” to reach the BoJ’s 2% target.
BoJ governor nominee said the run-up in inflation is driven by “cost-push” factors — including rising import prices that would prove temporary — rather than strong demand.
Incoming Bank of Japan Governor Kazuo Ueda said on Monday the merits of the bank’s current monetary policy outweigh the costs, stressing the need to maintain support for the Japanese economy with ultra-low interest rates.
Technical View – USDJPY having massive resistance 135.20
On the above daily chart of USDJPY formed a high wave candlestick and struggled to break above its previous day high 135.20. Indicating range bound to neutral momentum. However, the pair is still trading above 161.8% Fibonacci Retracement which indicates upside momentum.
Outlook –
For the coming trading session 135.20 levels will act as an immediate resistance level. Sustain trade above price expected to test its strong resistance of 135.80-136.10 which is next Fibonacci retracement. The pair could be open for 136.55-137.20 in the short term if it breaks and sustains above 136.10.
Alternatively, on the downside crucial support seen at 134.00 below it 133.55-133.20.