- The BoJ decision to stand pat prompted some long-unwinding trade on Thursday.
- Bears further take cues from reviving safe-haven demand and fresh USD weakness.
The USD/JPY pair remained under some selling pressure for the second consecutive session on Friday and added to the previous session post-BoJ losses.
The fact that the Bank of Japan (BoJ) refrained from following the ECB and the Fed by not cutting rates turned out to be one of the key factors that provided a goodish lift to the Japanese Yen and prompted some long-unwinding trade on Thursday. On the other hand, the US Dollar failed to capitalize on its post-FOMC positive move and further collaborated to the pair’s overnight modest pullback from multi-week tops.
Weighed down by reviving safe-haven demand
Despite the hawkish rate cut by the Fed, the US Treasury bond yields were back under pressure and turned out to be one of the key factors weighing on the greenback. This coupled with the prevailing cautions mood, amid fears of a further escalation of geopolitical tensions in the Middle East, further benefitted the Japanese Yen’s relative safe-haven status and exerted some follow-through pressure on the major.
On the trade-related front, a Chinese delegation is reported to visit American farms next week and lay the groundwork for high-level discussions in early-October. Hence, any incoming trade-related headlines might influence the broader market risk sentiment and produce some meaningful trading opportunities on the last trading day of the week amid absent relevant market-moving economic releases from the US.
Technical levels to watch