USD/JPY sticks to modest gains above 111.00 handle post-BoJ

   “¢   JPY weakens across the board after the latest BoJ monetary policy update.
   “¢   The weakening trend stalls as the post-meeting press conference got underway.

The USD/JPY pair trimmed some of its early gains but has managed to hold with modest gains, above the 111.00 handle, as the BoJ’s post-meeting press conference gets underway.  

The Japanese Yen weakened across the board, helping the pair to quickly reverse a knee-jerk fall to an intraday low level of 110.73 after the Bank of Japan (BoJ) announced to strengthen the framework for continuous powerful easing and added forward guidance that interest rates will stay extremely low for an extended period of time.

The BoJ voted 7-2 to hold interest rate target unchanged at -0.1% and maintain 10-year JGB yield target at around 0%, dashing market expectations that the central bank might raise the long-term yield target or reduce QE purchases to make the policy more sustainable.  

The pair spiked to a one-week high level of 111.44, albeit lacked any strong follow-through and was capped by a subdued US Dollar price action. The pair retreated farther following the opening remarks by the BoJ Governor Haruhiko Kuroda at the post-meeting press conference.

As investors continue to digest the post-BoJ volatility, traders on Tuesday will also look forward to the US economic docket– featuring the release of personal income/spending data, core PCE price index, Chicago PMI and Conference Board’s consumer confidence index, in order to grab some short-term trading opportunities.  

The key focus, however, would be on the latest FOMC monetary policy update and the keenly watched US monthly jobs report (NFP), which is expected to trigger some unusual volatility through the course of this week.  

Technical outlook

Yohay Elam, FXStreet’s own Analyst explains: “Further above, 111.56 is an even more significant cap with the confluence of the Pivot Point one-week Resistance 1, the PP one-month R1, the Bolinger Band one-day Middle, the PP one-day R3, and last week’s high.”

“Looking down, support is not that far either. 110.64 is the meeting point of the Simple Moving Average 50-one-day, the Pivot Point one-day Support 3, last week’s low, and the PP one-week S1. Below, 110.18 is the meeting point of the SMA 200-one-day, the PP one-week Support 2, and the Fibonacci 38.2% one-month, all potent lines,” he added further.