- USD/JPY is flatlined around 113.37, having defended a key trendline support on Tuesday.
- BOJ summary showed the policymakers differed over the 10-year yield range.
- At least one board member is calling for a wider band.
The USD/JPY pair is trading in a sideways manner around 113.37 in Asia, having defended a key rising trendline support for the eighth time in the last 16 days yesterday.
The Bank of Japan (BOJ) decided last month to allow the long-term yields to move at double the previous range of around minus 0.1 percent to 0.1 percent.
The summary of opinions from the last week's BOJ rate decision released earlier today revealed that one member is already calling for a wider 10-year yield range (0.25 percent up or down). A wider long-term yield range would provide more breathing space for the BOJ (less bond buying).
However, the JPY has not picked up a bid as the summary also showed discussions on whether the BOJ should ramp up its already massive stimulus. One member warned that allowing long-term rates to rise significantly could worsen the inflation outlook.
The conflicting messages have left USD/JPY at the mercy of the yield differential. At press time, the 10-year bond yield spread is seen at 286 basis points, well below the 2018 high of 305 basis points set in May.
A sharp rise in the yield spread could bode well for the USD/JPY pair.
USD/JPY Technical Levels
Resistance: 111.48 (previous day's high), 112.15 (Aug. 1 high), 113.18 (recent high)
Support: 111.30 (rising trendline support), 110.85 (50-day moving average), 109.99 (200-day moving average)
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