A fresh buying-wave gripped the Japanese yen following the announcement of an unchanged BOJ policy decision, dragging USD/JPY back towards daily lows reached near 104.70, before running into fresh bids at the last.
USD/JPY: BOJ cuts inflation forecasts
The dollar-yen pair dropped to test daily lows in a knee-jerk reaction to the steady policy decision announced by the Bank of Japan (BOJ), although quickly regained footing and reverted to the familiar range near 5-DMA after markets digested downward revisions to the inflation outlook by the BOJ
The BOJ, however, left the growth forecasts unchanged at 1% for FY 2016/17, which keeps the sentiment around the yen buoyed somewhat, capped further bounce in USD/JPY. Focus now remains on BOJ Governor Kuroda’s presser for fresh insights on the inflation and growth forecasts, while the future guidance on the interest rates will be also closely eyed.
Calendar-wise, the Chinese manufacturing reports bettered expectations, as investors now look forward to the ISM manufacturing gauge from the US due later in the NA session.
USD/JPY Technical levels to watch
In terms of technicals , the immediate resistance is located at 105 (round figure). A break above the last, the major could test 105.23 (Oct 31 high) and 105.89 (Jul 26 high) beyond the last. While to the downside, the immediate support is seen at 104.67 (daily low) next at 104.49 (10-DMA) and below that at 104.16 (20-DMA).
- R3 104.97
- R2 104.83
- R1 104.70
- PP 104.56
- S1 104.42
- S2 104.28
- S3 104.15