USD/JPY trades flat on the day near 112.30, Wall Street opens higher

The USD/JPY pair is having a difficult time setting its next short-term direction on Wednesday and stays in its tight daily trading range. As of writing, the pair was virtually unchanged on the day at 112.32.

Earlier today, the BoJ announced its decision to keep the interest rate and monetary policy unchanged. Speaking on the policy outlook, Governor Kuroda said that they would maintain the low-yield environment for an extended period and added that the inflation was taking longer than expected to accelerate. Although the USD/JPY rose to a fresh 2-month high at 112.44 following Kuroda's remarks, it failed to preserve its momentum as the greenback failed to extend its recovery gains.

"The BoJ has clearly shifted to auto pilot mode after it announced some policy tweaks at the July meeting, and an unchanged signal from the BoJ today was fully expected. Hence, no reaction in USD/JPY or the Japanese fixed income market,” Danske Bank analysts noted in a recently published report.

Today's data from the U.S. showed that building permits declined 5.7% in August while housing starts increased 9.2%. Meanwhile, Wall Street started the day on a positive note to reflect a positive market mood and the 10-year US T-bond yield rose to its highest level since late May at %3.083 to help the pair gain traction. The US Dollar Index was last seen up 0.1% on the day at 94.70.

On Thursday, Japan's ruling Liberal Democratic Party will be holding its presidential election, at which Prime Minister Shinzo Abe will be seeking to win a third term to become Japan’s longest-serving leader.

Technical outlook

On the upside, resistances for the pair align at 112.60 (Jul. 20 high), 113.15 (Jul. 19 high) and 114 (psychological level). Supports could be seen at 112 (psychological level), 111.40 (20-DMA) and 110.80 (100-DMA).