- The Bank of Japan is inclined to maintain its current key yield control policy.
- The dollar surged against the yen, registering its most significant one-day gain since April.
- Japan’s core inflation rose to 3.3%, per the market forecast.
Today’s USD/JPY price analysis is bullish. On Friday, the yen weakened against the dollar following a Reuters report. The report indicated that the Bank of Japan (BOJ) is inclined to maintain its current key yield control policy.
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Notably, sources familiar with the matter revealed that BOJ policymakers prefer to analyze additional data. They want to ensure sustained growth in wages and inflation before considering any policy changes. Moreover, the report mentioned the absence of a consensus within the central bank, making the decision a potentially close call.
As a result, the dollar surged against the yen, registering its most significant one-day gain since April. Furthermore, it reached a nearly two-week high of 141.91. Before the report, the dollar was only up around 0.3% against the yen.
Earlier in the trading session, yen activity remained relatively subdued despite Japan’s core inflation rising to 3.3%. This figure aligned with the market forecast but was still above the BOJ’s 2% target.
Kenneth Broux from Societe Generale speculated that the sharp movement in the yen might prompt Japan’s finance ministry to release further public statements to support the currency.
Moreover, Japan’s inflation has surpassed the BOJ’s target for over a year. Consequently, there has been speculation that the central bank might adjust its yield curve control during the July 27-28 meeting.
USD/JPY key events today
After the inflation report from Japan, investors do not expect any more vital economic releases. All focus is now on the BOJ amid speculation on its upcoming meeting.
USD/JPY technical price analysis: Bulls facing resistance at 142.02.
On the charts, there has been a sudden surge in momentum, with the RSI rising to the overbought region. At the same time, the price has pushed off the 140.01 support level with a massive bullish candle. This move has propelled the price further above the 30-SMA, confirming bullish control.
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However, bulls have paused at the 142.02 resistance level. If bullish momentum is still strong, the price will likely breach 142.02 and rise to 144.02. If not, it will consolidate or pull back to retest the 30-SMA.
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Saqib Iqbal
