USD/JPY moved above 109.00 even though BOJ trimmed JGB purchases

• Bank of Japan (BOJ) trimmed purchases of the Japanese government bonds (JGBs) maturing in 5-10 years.
• But, JPY failed to pick up a bid.
• The BOJ’s move does not reflect a policy change.

The BOJ reduced the purchases of Japanese Government Bond (JGBs) maturing in 5-10 years to JPY 430 billion from the previous JPY 450 billion.

The drop in bond purchases by the central bank is widely considered as a net positive for the domestic currency. However, the Japanese Yen has not picked up a bid, possibly because the BOJ’s decision to reduce JGB purchases is a part of routine operations and does not represent a policy change.

It also means the central bank may boost JGB purchases in future if due to some reason the 10-year JGB yield moves higher from the BOJ’s target of zero percent.

As of writing, the currency pair is trading at 109.05, having clocked a session high of 109.20 a few minutes ago.

The pair will likely build upon the repeated rebound from the ascending 50-day moving average (MA) if the US wage growth figure, due at 12:30 GMT, blows past expectations.

USD/JPY Technical Levels

The resistance is seen at 109.55 (10-day MA), 110.00 (psychological hurdle), and 110.17 (200-day MA). Meanwhile, support is lined up at 108.72 (session low), 108.44 (50-day MA), and 108.11 (May 29 low).