As the Bank of Japan (BoJ) maintains its monetary policy as expected during early Friday. USDJPY receives bids to renew intraday high above 140.70. The US Dollar’s consolidation of the previous day’s severe losses. And a corrective bounce in the yields may strengthen the Yen pair’s upward momentum.
According to the most recent monetary policy meeting update. The BoJ maintains its short-term interest rate objective of -0.1%. While directing 10-year Japanese Government Bond (JGB) rates with a range of +/-0.50%. The Japanese government Bank further allays concerns about inflation by noting. That pass-through effects have recently pushed the Consumer Price Index (CPI) up to 3.5%.
The US Dollar Index (DXY) on the other hand, picks up bids around 102.30 to reverse. The largest daily loss in three months. Even though the policymakers did say the same thing on Wednesday. The quotation fell sharply the day before due to conflicting US data and the market’s lack of confidence in the Fed’s rate hike in July.
For clear guidance, traders will look for more information from Governor Ueda and the US Michigan Consumer Sentiment Index.
However, the recent US dollar recovery may also be attributed to the slightly higher Treasury bond yields, the cautious tone ahead of the second-tier data, and the almost 70% market bets on the July Fed rate. according to the Fed Watch Tool of the CME.
After seeing how the BoJ was initially received, the Yen pair will watch Governor Kazuo Ueda’s news conference at 6:00 AM GMT for new inspiration. The BoJ’s Ueda has previously ruled out the need for any modification to the existing monetary policy, but indications that the ultra-easy policies may be ending soon may provide the USDJPY bulls a break.
The early readings of the Michigan Consumer Sentiment Index (CSI) for June and the projections for inflation over the next five years will be critical for determining the next course of action, particularly in light of the Fed’s recent relaxation of its hawkish bets.
USDJPY Technical examination
The USDJPY is still trading between 141.60 and 137.70 as of press time, within a 3.5-month-old rising wedge bearish chart formation.
