- Bank of Japan (BOJ) held key policy tools unchanged as expected, but cut assessment on inflation, underscoring the rising Fed-BOJ policy divergence.
- Consequently, USD/JPY jumped to session highs, could extend gains further.
At press time, the currency pair is trading at 110.73.
BOJ's decision to offer a weaker view on inflation only highlights the rising divergence between the central bank and its global peers, namely the Fed and the ECB. The US central bank delivered a hawkish rate hike earlier this week and the ECB pulled the plug on its QE program/
Clearly, the JPY is on a weaker footing and hence USD/JPY could soon scale the weekly high of 110.85 in a convincing manner.
USD/JPY Technical Levels
Resistance: 110.85 (weekly high), 111.40 (recent high), 112.00 (psychological hurdle).
Support: 110.41 (5-day moving average), 110.20 (200-day moving average), 110.00 (psychological support).
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