USD/JPY ignores BoJ headlines, extends sideways grind around mid-107s

• USD/JPY continues to trade in tight consolidation channel near 107.50.
• Bank of Japan (BoJ) left its policy rate unchanged at -0.1% as expected.
• Announcement of new BoJ loan scheme failed to impact JPY’s valuation.

The USD/JPY pair is fluctuating in a narrow channel for the third straight day on Wednesday and is having a difficult time setting its next near-term direction. As of writing, the pair was down 0.15% on the day at 107.43.

JPY ignores BoJ actions

Earlier in the day, the Bank of Japan (BoJ) announced that it will extend the term of loans for the lending scheme aimed at combating the coronavirus fallout to 6 months from 3 months. However, the BoJ kept its policy unchanged at -0.1% as expected and failed to impact USD/JPY’s movements.

While speaking on the economic outlook, BoJ Governor Haruhiko Kuroda noted that there was a chance that the economic recovery would be “V-shaped.”

Moreover, the Nikkei Asian Review reported on Friday that Japan was planning to set up a JPY 12 trillion safety net to help firms hit with the coronavirus pandemic.

Meanwhile, after suffering heavy losses during the first half of the week, the US Dollar Index staged a rebound on Thursday and continues to build on the recovery gains. At the moment, the index is up 0.3% on the day at 99.72.

In the second half of the day, the US economic docket won’t be featuring any significant macroeconomic data releases. Investors are likely to continue to react to changes in the market mood. However, the fact that the USD and the JPY are both being treated as safe-havens lately suggests that the pair could struggle to make a decisive move in either direction.

Technical levels to watch for