Japanese Yen adds to intraday gains after BoJ Governor Ueda's comments

The Japanese Yen (JPY) remains on the front foot against its American counterpart following the Bank of Japan Governor Kazuo Ueda's opening remarks at the post-meeting press conference. Apart from this, a weaker tone around the equity markets turns out to be another factor underpinning the safe-haven demand. This, along with the lack of any meaningful US Dollar (USD) buying, keeps the USD/JPY pair depressed below the 153.00 mark heading into the European session.

Any meaningful JPY appreciation, however, seems elusive in the wake of the uncertainty over the BoJ's rate-hike plans, further fueled by a rare political turmoil after Sunday’s snap election in Japan. Moreover, a further rise in the US Treasury bond yields, bolstered by bets for smaller rate cuts by the Federal Reserve (Fed) and deficit-spending concerns after the US election, should contribute to capping the lower-yielding JPY ahead of the US Personal Consumption Expenditure (PCE) Price Index. 

Daily Digest Market Movers: Japanese Yen builds on the post-BoJ move-up amid subdued USD demand

• The Bank of Japan decided to leave its monetary policy settings unchanged amid a rare political turmoil after Sunday’s snap election in Japan that snatched the Liberal Democratic Party’s majority for the first time in 15 years.
• In the accompanying monetary policy statement, the central bank reiterated that it will continue to raise interest rates if the economy and prices move in line with the forecast, which, in turn, provides a modest lift to the Japanese Yen.
• During the post-meeting press conference, BoJ Governor Kazuo Ueda said that uncertainties surrounding Japan's economy and prices remain high, and keeps a potential interest rate hike move at the December meeting on the table.
• Government data showed this Thursday that Japan's Industrial Production bounced after declining by 3.3% in August and rose 1.4% in September. The report also revealed that companies expect production to increase by 8.3% in October.
• A separate government report showed that Retail Sales increased by 0.5% from a year earlier in September, marking a sharp deceleration from the 3.1% rise in the previous month and pointing to a loss of momentum in consumption.
• The US Dollar attracts some dip-buying and reverses a part of the previous day's modest decline led by mixed economic data, which, in turn, keeps the USD/JPY pair close to its highest level since July 31 touched earlier this week. 
• The Automatic Data Processing (ADP) reported on Wednesday that private sector employers added 233K new jobs in October, better than the previous month's upwardly revised reading of 159K and surpassing optimistic estimates. 
• The growth in employment is expected to boost consumer spending and contribute to overall growth, validating the view that the economy remains on strong footing and that the Federal Reserve will proceed with smaller rate cuts.
• Separately, the US Bureau of Economic Analysis' initial estimate suggested that the world's largest economy expanded by a 2.8% annualized pace during the third quarter, slower than the 3% growth recorded in the previous quarter. 
• The markets are pricing in the possibility that the Fed will lower borrowing costs by 25 basis points in November, which, along with deficit-spending concerns after the US election, remains supportive of elevated US bond yields.
• Later during the early North American session, the release of the Personal Consumption Expenditure (PCE) Price Index could provide fresh cues about the Fed's interest rate outlook and influence the USD price dynamics. 

Technical Outlook: USD/JPY could now extend the corrective decline, 152.00 mark holds the key for bulls

From a technical perspective, the recent repeated failures to find acceptance beyond the 61.8% Fibonacci retracement level of the July-September downfall warrant some caution for bulls. Moreover, the Relative Strength Index (RSI) on the daily chart is on the verge of breaking into the overbought zone. This further makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for additional gains. 

Some follow-through selling could drag the USD/JPY pair to the 152.00 mark en route to the 151.45 support and the 151.00 mark. The downward trajectory could extend further towards challenging the 150.65 confluence resistance breakpoint, which should now act as a key pivotal point and a strong base for spot prices.

On the flip side, the 153.85-153.90 region now seems to have emerged as an immediate strong barrier. A sustained strength beyond, leading to a breakout through the 154.00 round-figure mark, has the potential to lift the USD/JPY pair towards the 154.35-154.40 supply zone en route to the 155.00 psychological mark. Spot prices could extend the momentum and eventually climb to test the late-July swing high, around the 155.20 region.