- USD/JPY picks up bids following BOJ decision but struggles to keep the upside.
- BOJ removes the reference to 6 trillion yen annual ETF buying target while keeping rates unchanged.
- Market sentiment stays mixed as vaccine, unlock optimism battles reflation, geopolitical fears.
- US 10-year Treasury yields ease from 14-month top, S&P 500 Futures print mild gains but Nikkei 225 drops 1.0%.
USD/JPY picks up bids to 109.00, after bouncing off intraday low of 108.90, following the BOJ rate decision on early Friday.
Despite matching wide expectations of a no change in its benchmark policy rate of -0.10%, the Bank of Japan (BOJ) altered the ETF buying limits while removing the lower ceiling of 6 trillion yen ($55 billion), keeping n upper limit of 12 trillion yen.
Read: Breaking: BOJ expands JGB yield target band, drops ETF buying target, USD/JPY jumps
Market’s mood could also be traced for the USD/JPY pair’s latest moves, considering its safe-haven allure. Risk-tone has been mixed off-late as US bond bears catch a breather around the highest since January 2020 while the Sino-American tensions return to the desk.
Also challenging the sentiment is the US warning to North Korea and tough stand against Iran over their secret arms building.
On the contrary, US President Joe Biden’s optimism on reaching the target of 100 million covid shots and the European Medicines Authority’s (EMA) support to the AstraZeneca vaccine seem to favor the mood. It’s worth mentioning that Japan’s calling off the emergency in Tokyo and the World Health Organization’s (WHO) likely back-up to the AstraZeneca covid jabs in Friday’s update also favor risks.
Amid these plays, the US 10-year Treasury yield eases from the fresh multi-day high flashed the previous day whereas S&P 500 Futures print mild gains, despite recently easing from the intraday low. Further, Japan’s Nikkei 225 remains on the back foot
Having witnessed the initial reaction to BOJ moves, USD/JPY traders will keep their eyes on Governor Haruhiko Kuroda’s speech, at 06:00 GMT. However, more important will be the updates on US-China and Treasury yield moves amid a light calendar.
Technical analysis
Although 10-day SMA and July 2020 tops, respectively around 108.80 and 108.15, restrict the short-term downside of USD/JPY, the bulls are less likely to get convinced below 109.40.
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