USD/JPY shrugs off BOJ decision, remains on the back foot around 110.00

USD/JPY extends losses while taking rounds to 110.00 during early Tuesday. The pair shrugged off the BOJ’s widely anticipated monetary policy decision as risk aversion seems to be in the play.

In addition to the monetary policy decision, wherein the Bank of Japan (BOJ) stood pat, details of the fourth quarter (Q4) economic outlook were also released. The Japanese central bank upwardly revised the GDP growth for fiscal 2019/20 and 2020/21.

Read: BOJ leaves monetary policy unchanged, as widely expected

The pair earlier dropped after headlines of China virus grabbed market attention. While four people have already died of the same in China, an Australian has also been recently tested for the human transmitted disease. In a reaction, Wuhan has set up a Wuhan Pneumonia control center to prevent the further spread of the disease. It has ordered stronger supervision of markets and public transportation hubs and encouraged the cancellation of unnecessary public gatherings, vowing to release timely updates,” says the Global Times.

Following the risk-off markets showed a little reaction to the comments from the Chinese Commerce Ministry that said, “China welcomes competitive US products to enter china's markets.”

Additionally, news of International Monetary Fund’s (IMF) cautious optimism and the Libyan commander Khalifa Haftar’s refrain from respecting the global push for peace grabbed the spotlight during the early-Asian session.

Portraying the same, the US 10-year treasury yields drop four basis points to 1.79% whereas the S&P 500 Futures decline 0.40% to 3,311. Further, Japan’s NIKKEI also lost 1.0% to 23,850 by press time.

Traders will now focus on BOJ Governor Haruhiko Kuroda’s press conference, around 06:00 GMT, for further direction. Following that, how the US traders react to the fresh headlines after coming back from the Martin Luther King Day Holiday will also be watched carefully.

Technical Analysis

USD/JPY prices need to provide a daily close beyond an upward sloping trend line since November 07, at 110.25 now, to aim for May month top near 110.70, failing to do so can recall 21-day SMA level of 109.30.