USDJPY rallied to its three-week highs yesterday at 107.76 after a report from the BOJ signaled more willingness from the central bank to ease liquidity even further. Today, the currency pair gave up some of its gains as BOJ Governor Kuroda confirmed the report. As of this writing, USDJPY is down by 0.23% for the day as it trades at 107.42.
According to the central bank head, they still had more tools at their disposal to loosen monetary policy even more. Kuroda cited cutting rates, increasing money supply, and stepping up its market operations to provide additional support for the economy amid the pandemic. This news should have been bearish for the yen and pushed USDJPY higher. However, these remarks did not come as a surprise as the BOJ Summary of Opinions report yesterday already cited them. And so, BOJ Kuroda’s comments today may have already been price in which could help explain the price action on USDJPY today.
Download our Q2 Market Global Market Outlook
USDJPY Outlook
Bulls pushed USDJPY well beyond resistance at the falling trendline (from connecting the highs of April 6, April 9, April 23, and April 30). However, it would seem as though the currency pair has met resistance at the 200 SMA. If there are enough sellers in the market, it’s not improbable for USDJPY to retest is previous trendline for support around 106.65. This price also corresponds to the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of May 6 to the high of May 11.
On the other hand, a bullish close above the high of May 11 at 107.76 could mean that USDJPY still has some fuel left to trade higher. Should this happen, the currency pair could trade all the way up to 109.25 where it peaked on April 6.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow me on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.