• BoJ monetary policy decision turned out to be rather non-event for the market.
• Risk-on mood undermines JPY’s safe-haven demand and extended some support.
• The USD remains on the defensive and fails to provide any meaningful boost.
The USD/JPY pair lacked any firm directional bias and extended its sideways consolidative price moves through the mid-European session.
Despite a sharp intraday pull-back of around 40-pips from 1-1/2 week tops touched earlier today, the pair managed to find some support near the very important 200-day SMA and stabilized around the 111.70-75 region. However, a combination of diverging forces failed to provide any meaningful impetus and led to a subdued/range-bound trading action on the last day of the week.
With today's BoJ monetary policy update turning out to be a rather non-event for the market, the prevalent risk-on mood, as depicted by strong gains in equities, was seen denting the Japanese Yen's relative safe-haven status and extended some support to the major.
Meanwhile, the US Dollar bulls seemed unimpressed by an intraday bounce in the US Treasury bond yields and remained on the defensive, which eventually turned out to be one of the key factors failing to provide any meaningful impetus.
It would now be interesting to see if the pair is able to gain any traction or continued with its lacklustre trading action as market participants now look forward to the US economic docket, featuring the release of Empire State Manufacturing Index, industrial produce/capacity utilization data and Prelim UoM Consumer Sentiment for some short-term trading opportunities.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst explains: “The 4 hours chart offers a neutral-to-bullish stance, as the pair holds above its 100 and 200 SMA, which retain their bullish slopes, while technical indicators continue to consolidate above their midlines, with no clear directional strength. Chances of an upward extension seem unlikely as there's no big catalyst in the horizon to trigger dollar's strength.“
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