- USD/JPY remained depressed for the third consecutive session on Monday.
- The selling pressure picked up pace following the latest BoJ policy update.
- Some follow-through USD weakness did little to lend any support to the pair.
The USD/JPY pair dropped to near two-week lows in the last hour, with bears now eyeing a subsequent fall below the 107.00 round-figure mark.
The pair extended last week’s rejection slide from the 108.00-108.10 supply zone and remained depressed for the third consecutive session on Monday. The selling pressure picked up some additional pace and dragged the pair below the 107.35-30 support area after the latest BoJ monetary policy update.
At its shortened one-day virtual meeting on Monday, the Bank of Japan (BoJ) decided to keep rates unchanged at -10bps and maintain 10yr JGB yield target at 0.00%. The Japanese central bank said that it will increase the purchases of a corporate bond, commercial paper and also pledged to buy an unlimited amount of JGBs.
This comes amid some follow-through US dollar weakness, which further contributed to the pair’s offered tone on the first day of a new trading week. The downfall seemed rather unaffected by the likely extension of the national emergency in Japan, instead took cues from some follow-through US dollar weakness.
The pair failed to gain any respite from the BoJ Governor Haruhiko Kuroda’s comments at the post-meeting press conference, showing readiness to deepen negative interest rates as future policy options. Kuroda further said to keep long-term JGB target around 0% even when the coronavirus outbreak is resolved.
Bulls also seemed unimpressed by the prevailing positive mood around the equity markets, which tends to undermine the Japanese yen’s safe-haven demand. The global risk sentiment remained supported by hopes for the reopening of the US economy and optimism over drug trials for treatments of the deadly disease.
It will now be interesting to see if the pair is able to attract any buying at lower levels or the ongoing slide marks a near-term bearish breakdown amid absent relevant market moving economic releases from the US.
Technical levels to watch
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