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USDJPY Unchanged as BOJ Keeps Rates Steady; Warns of More Easing If Economy Deteriorates


USDJPY is trading around its open price for the day after the BOJ kept interest rates steady in its monetary policy decision. As of this writing, the currency pair is trading 0.13% above its opening price at 107.47.

As expected, the BOJ left its official cash rate unchanged at -0.10%. The central bank also reiterated that it will continue to buy enough government bonds to keep 10-year JGB yields at 0.00%.

The statement released by the BOJ constantly described the Japanese economy being in a “severe situation” as the coronavirus pandemic continues to disrupt overall activity. In an attempt to spur growth, the central bank is looking to raise its fiscal stimulus program from 75 trillion JPY to 110 trillion JPY.

Policymakers also said that they would increase monetary policy easing if the economy takes a turn for the worse. 

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USDJPY Outlook

On the 4-hour time frame, it can be seen that USDJPY has retraced some of its losses back to the 23.6% Fib level (drawing the Fibonacci retracement tool from the high of June 5 to the low of June 11). This price, around 107.50, also coincides with the 200 SMA. A few reversal candlesticks have formed which could mean that sellers are looking to push price lower to last week’s lows at 106.56. If there are enough sellers in the market, we could even see USDJPY fall to 105.97 where it bottomed on May 6.

Alternatively, a strong bullish close above yesterday’s high at 107.55 could mean that the currency pair could soon trade higher to 107.88 where it could test the 100 SMA for resistance. If resistance does not hold, the next ceiling could be at 109.84 where USDJPY topped on Juen 5.

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