USD/JPY remains bid as BOJ maintains the status quo

USD/JPY remains bid around 112.45 after the Bank of Japan maintained the short-term interest rate target at -0.1 percent and retained the 10-year yield curve control target around zero percent.

The status quo was in line with the market expectation. BOJ member Kataoka dissented on yield curve control as he believes it is not enough to meet the inflation target around fiscal year 2019.

The BOJ decision has not had a major impact on the US-Japan 10-year bond yield spread, which continues to hover around the overnight high of 224 basis points.

Ahead in the day, the USD/JPY could maintain its bid tone as European desks digest the heightened odds of one more Fed rate hike in December. However, caution is advised, given the overbought nature of the daily indicators. Risk aversion in the equities due to hawkish Fed could also weigh over the USD/JPY pair.

USD/JPY Technical Outlook

FXStreet Chief Analyst Valeria Bednarik writes-

" From a technical point of view, the 4 hours chart maintains the risk towards the upside, despite the late US session pullback, as indicators just retreated from overbought readings, but are far above their mid-lines, whilst the 100 SMA keeps advancing modestly above the 200 SMA, both well below the current level. Tuesday's high at 111.87 is key, as a break below it will likely anticipate some further slides ahead."

Support levels: 111.90 111.50 111.20

Resistance levels: 112.50 112.85 113.30