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  • The Bank of Japan (BOJ) kept rates unchanged as expected and reiterated a rosy economic view.
  • The USD/JPY has barely moved after the BOJ rate decision and could take cues from the treasury yields during the day ahead.

The BOJ rate decision has turned out to be a non-event for the markets as expected.

The central bank held rates unchanged at -0.1 percent and more importantly, left unchanged the forward guidance that interest rates will remain extremely low for an extended period.

Further, it retained its view that the economy is expanding moderately even though the escalating trade tensions pose a risk to the global economy.

All-in-all, the BOJ offered little that markets already do not know, thus leaving the USD/JPY at the mercy of the Treasury yield.

At press time, the 10-year treasury yield is trading at 3.05 percent, having clocked a four-month high of 3.06 percent yesterday. Meanwhile, the USD/JPY is seen at 112.35.

With technicals biased toward bulls and treasury yields rising, the USD/JPY looks set to extend gains toward 113.00.

USD/JPY Technical Levels

Resistance: 112.39 (upper end of the range on 5-min chart), 112.80 (July 13 high), 113.00 (psychological hurdle)

Support: 112.10 (5-day moving average), 111.83 (Aug. 29 high), 111.63 (10-day moving average)

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