USD/JPY jumps 40 pips as the BOJ makes its yield curve control policy more flexible
|- JPY is losing ground as BOJ maintained the long-term yield target.
- BOJ has only made its policy framework more flexible, squashing hopes of policy normalization.
The USD/JPY picked up a bid as the Bank of Japan (BOJ) maintained the long-term yield target of around zero percent and made its ultra-easy policy framework more sustainable.
As of writing, the currency pair is trading at a session high of 111.43, having clocked a session low of 110.73 earlier today.
Speculation had gathered pace in the last two weeks that the BOJ might raise the long-term yield target or reduce QE purchases to make the policy more sustainable. Consequently, USD/JPY fell below the uptrend from March last week, weakening the bull case.
However, the central bank's decision to keep yield target unchanged has reinforced the view that the ultra-loose monetary policy will remain in place as long as inflation remains well below its 2 percent objective. As a result, the JPY is being offered across the board.
The USD/JPY could rise further if the US core personal consumption expenditure (core PCE), due today at 12:30 GMT, betters estimates.
USD/JPY Technical Levels
Resistance: 111.48 (10-day moving average), 112.20 (July 16 low), 113.18 (July 19 high)
Support: 111.00 (psychological support), 110.57 (50-day moving average), 110.06 (200-day moving average).
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