• USD/JPY regained positive traction on Friday after the BoJ announced its monetary policy decision.
  • The BoJ stuck to its ultra-accommodative policy stance and downgraded its economic assessment.
  • The Fed’s more hawkish outlook underpinned the USD and supports prospects for additional gains.

The USD/JPY pair inched back closer to the multi-year peak during the early European session and is now looking to build on the momentum beyond the 119.00 mark.

Following the previous day's two-day/directionless consolidative price moves, the USD/JPY pair attracted fresh buying on Friday after the Bank of Japan announced its policy decision. As was expected, the BoJ stuck to its accommodative policy stance and also downgraded the overall assessment of the economy.

The Japanese central bank warned of a very high uncertainty over the economic fallout from the Ukraine crisis and signalled to keep its monetary policy ultra-loose for the time being. In the post-meeting press conference, Governor Haruhiko Kuroda reiterated that the BoJ will ease further without hesitation as needed.

Conversely, the Fed on Wednesday sounded more hawkish and announced the start of the policy tightening cycle. Moreover, the so-called dot-plot indicated that the Fed could raise rates at all the six remaining meetings in 2022 to combat high inflation. The divergent BoJ-Fed policy outlooks acted as a tailwind for the USD/JPY pair.

Bulls further took cues from elevated US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond held just below the highest level since June 2019 touched earlier this week. This, in turn, favours bullish traders and supports prospects for an extension of the USD/JPY pair's recent bullish trajectory.

That said, a generally weaker tone around the equity markets might drive some haven flows towards the Japanese yen and cap gains for the USD/JPY pair. The lack of progress in the Russia-Ukraine ceasefire talks turned out to be a key factor that weighed on investors' sentiment and benefitted traditional safe-haven assets.

Hence, it will be prudent to wait for sustained strength beyond the 119.00 mark before placing fresh bullish bets around the USD/JPY pair. Nevertheless, the major remains on track to record the highest weekly close since January 2016 amid a relatively thin US economic docket, featuring the release of Existing Home Sales data.

Technical levels to watch

USD/JPY

Overview
Today last price 118.95
Today Daily Change 0.35
Today Daily Change % 0.30
Today daily open 118.6
 
Trends
Daily SMA20 116.02
Daily SMA50 115.35
Daily SMA100 114.74
Daily SMA200 112.74
 
Levels
Previous Daily High 119.02
Previous Daily Low 118.37
Previous Weekly High 117.36
Previous Weekly Low 114.81
Previous Monthly High 116.34
Previous Monthly Low 114.16
Daily Fibonacci 38.2% 118.62
Daily Fibonacci 61.8% 118.77
Daily Pivot Point S1 118.3
Daily Pivot Point S2 118
Daily Pivot Point S3 117.64
Daily Pivot Point R1 118.96
Daily Pivot Point R2 119.32
Daily Pivot Point R3 119.62

 

 

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