USD/JPY pulls back from intraday high above 108.00 on BOJ’s cautious optimism

USD/JPY drops towards 108.00, currently up 0.20% intraday near 108.30, following the Bank of Japan (BOJ) monetary policy decision on early Tuesday.

Although the central bank kept its benchmark rates and bond yield targets unchanged, the pair traders should have taken clues from the quarterly economic forecasts for Q1 2021.

Read: BOJ Quarterly Report: There is big uncertainty on outlook

Earlier in the day, Bloomberg came out with the analytical piece suggesting an upward revision to “one or more of its growth projections” while saying, “The updated projections will imply that the BOJ is not in a position to discuss an exit strategy, in stark contrast with some of its global peers.”

It should, however, be noted that the recent challenges to US President Joe Biden’s infrastructure spending and the covid woes in Japan and India also weigh on the quote.

Ahead of the event, USD/JPY portrayed the US dollar index (DXY) recovery amid mild intraday losses by stock futures. However, the BOJ’s cautious optimism seems to recall the pair’s safe-haven appeal.

Moving on, the second-tier readings from the US housing and manufacturing should entertain USD/JPY traders. Though, the risk catalyst will be the key to watch ahead of Wednesday’s Federal Reserve (Fed) decision.

Read: S&P 500 Futures remain sluggish amid a quiet Asian session, Fed in focus

Technical analysis

50-day SMA tests USD/JPY pair’s upside break of a three-week-old resistance line near 108.40, a clear break of which can escalate the recovery moves toward 109.20-30 area comprising 21-day SMA and multiple levels marked since early March. Meanwhile, fresh declines below the stated support line, previous resistance around 108.00, will attack the monthly bottom surrounding 107.50-45.