USD/JPY reacts to BoJ, but faces resistance

Note: This section contains information in English only.
Source: Dukascopy Bank SA


The Japanese central bank has announced that it would continue with its ultra-loose monetary policy despite a widely discussed expectations of an end to the stimulus. Governor of the BoJ Ueda stated that the policymakers were waiting for more evidence of wage and price increases that would justify a change of policy.

The Japanese Yen's value adjusted to the announcement with an initial increase of volatility that was followed by a decline. Note the initial spike of the USD/JPY up, as the rate was kept negative instead of being increased. The pair jumped from levels near 142.50 up to 143.70. Afterwards, as the press conference of the central bank started at 06:30 GMT, the rate decline due to the Yen strengthening. The Japanese currency strengthened due to market reaction to the comments that, if wages and prices increase in Japan, the BoJ could change its policy.

However, as the events ended, the rate started a clear surge to the resistance of the 144.30/145.00 range. By the end of the day, the range had held and caused a decline down to the 143.50/144.00 range. The rate kept finding support in 143.50 and resistance was provided by 144.00.

A move below 143.50 is expected to look for support in the weekly simple pivot point at 143.23, the ascending 50-hour simple moving average and the 143.00 level. Further below, the combination of the 142.50 level and the 100-hour SMA might once again impact the rate.

In the case of a USD surge against the Yen, the 144.30/145.00 range is set to act as resistance. A failure of the zone to keep the pair down would result in the USD/JPY testing the combination of the 145.50 level and the weekly R1 simple pivot point at 145.50.
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