The yen inched up after the Bank of Japan kept its short-term interest rate target at minus 0.1%. And its pledge to guide 10-year government bond yields around zero.
The BOJ also boosted its growth forecasts. The central bank said that Japan’s economy is likely to continue on an expanding trend throughout the projection period through fiscal 2021, as the impact of the slowdown in overseas economies on domestic demand is expected to be limited. Although the effects of the slowdown are likely to remain for the time being.
The central bank also said that the year-on-year rate of change in the consumer price index (CPI, all items less fresh food), is likely to increase gradually toward 2 percent. Mainly on the back of the output gap remaining positive and medium- to long-term inflation expectations rising throughout the projection period.
About the risk balance. Risks to economic activity are skewed to the downside, particularly regarding developments in overseas economies. Risks to prices are skewed to the downside. Mainly due to the downside risks to economic activity and uncertainties over developments in medium- to long-term inflation expectations. The momentum toward achieving the price stability target of 2 percent is maintained but is not yet sufficiently firm. And thus developments in prices continue to warrant careful attention.
USDJPY Sees A Buying Opportunity Around 109.57/109.00 Levels…
According to the daily timeframe. The USDJPY remains bullish above 109.00/109.57 levels. But on the 4-hour time frame. There are some signs of weakness. A corrective pullback could be seen today and the coming days…
On the upside, immediate resistance comes at 110.28 levels. A 4-hour closing above that level will pave the way to 110.75 levels, further upside, resistance comes in the 111.50 level.
On the downside, any corrective recovery below 110.00 will be limited above 109.00/109.57 levels where a strong rebound is likely. Only a daily closing below 109.00 will suggest a large pullback…
In conclusion: Keep an eye on 110.28 levels. A break (H-4 closing basis) will pave the way to 110.75 and beyond. A consolidation below 110.28 may bring a sudden fall to 109.57/109.00 levels. A failure to break above 110.28 followed by a daily closing below 110.00 level will increase the for a corrective pullback to 109.57/109.00 levels.
Support: 110.00, 109.57, 109.00, 108.50, 107.85
Resistance: 110.75, 111.50, 112.05, 112.70, 113.50