USD/JPY eyes 111 on expectations for dovish Kuroda

USD/JPY has jumped 40 pips in Asia, possibly due to dovish BOJ expectations.
BOJ's Kuroda talked dovish yesterday and the selling in JPY seen at press time likely indicates the markets are expecting the central bank head to reiterate the readiness to do more if required.

Omkar Godbole FXStreet Contributor

The Japanese yen is being offered in Asia possibly on expectations that Bank of Japan (BOJ) governor Kuroda will flag easing risks.

At press time, USD/JPY is trading at 110.92, having hit a low of 110.53 earlier today. On Tuesday, BOJ's Kuroda said that the central bank would ramp up stimulus if a sharp rise in JPY hurts the economy and leads to disinflation.

Looking at today's 40-pip rally in USD/JPY, it appears as though markets are expecting Kuroda to reiterate readiness to do more if required.

Technically speaking, the path of least resistance is to the higher side, as the 5- and 50-day moving averages (MAs) have produced a bullish crossover for the first time since mid-December. The 10-day MA is also trending north and the 14-day relative strength index (RSI) is reporting bullish conditions with an above-50 reading.

The pair, therefore, could soon rise above 111.00 The bullish case would weaken if equities turn risk-averse, sending the pair below the downward sloping 50-day MA, currently located at 110.54.

USD/JPY Technical Levels

1. R3 111.2
2. R2 111.01
3. R1 110.81
PP 110.62
1. S1 110.42
2. S2 110.23
3. S3 110.03

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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