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  • USD/JPY quiet even as the BOJ minutes signal score for more easing. 
  • The minutes call for vigilance on the exchange rate.

USD/JPY trades flat and remains trapped in a channel pattern represented by trendlines connecting Jan. 11 and Jan. 19 highs and Jan. 13 and Jan. 21 lows in the wake of the dovish Bank of Japan (BOJ) meeting minutes released a few minutes ago. 

“Members shared view the central bank should ease without hesitation if needed with an eye on pandemic development,” the minutes said, adding that, “a few members said BOJ must analyze the effect of its policies to see how it can achieve its inflation target.”

One member took note of the recent USD weakening against the yen and called for vigilance on the exchange rate. In December, Prime Minister Suga told Japan’s Ministry of Finance to defend the level of 100 in USD/JPY – an indirect call for FX intervention should take the currency pair drop into two figures. 

So far, however, the BOJ minutes have failed to move the needle on the JPY pairs. The USD/JPY pair is seen at 103.77 at press time, having reached a low of 102.59 earlier this month. That was the lowest level since March 2020. 

With the Federal Reserve running an open-ended bond purchase program and markets expecting generous fiscal spending under Joe Biden’s Presidency, the odds appear stacked against the US dollar and in favor of a decline in USD/JPY below 100. Besides, the BOJ looks to have run out of ammo, making it look relatively less dovish than its US counterpart. 

Technical levels