For four consecutive trading sessions, the USD/JPY exchange rate is trying to rebound from the recent sharp collapse amid the Bank of Japan's aggressive surprise. The recovery gains did not exceed the 133.20 level, after the currency pair collapsed towards the support level 130.56, and settled around the 132.90 level, amid limited performance. This was in light of the global financial markets holiday on the occasion of holidays and lack of liquidity.
For his part, Bank of Japan Governor Haruhiko Kuroda stressed that the bank's latest amendments to the bond yield control program were not the beginning of the exit of monetary easing, but rather a way to make it sustainable and run smoothly. "This is definitely not a step towards an exit," Kuroda said in a speech at an event hosted by business lobby Keidanren on Monday. And “the bank will aim to achieve the goal of price stability in a sustainable and stable manner, accompanied by wage increases, by continuing monetary easing within the framework of yield curve control.”
His comments came after last week's policy adjustments to double the cap yield on 10-year bonds shocked global financial markets and fueled speculation that the Bank of Japan is taking a step toward policy normalization. Kuroda said yesterday that the move aims to improve market functions after noticing the deterioration of the country's bond market. The governor, whose term is set to expire in April, added that the BoJ would maintain its "maximum support" by maintaining accommodative financial conditions. “Japan’s labor market conditions are expected to tighten further, and companies’ behavior in setting prices and wages is also likely to change,” Kuroda added. and “we are approaching a critical juncture out of the prolonged period of low inflation and low growth since the collapse of the bubble economy.”
Forecast for the US dollar pair against the Japanese yen today:
- The USD/JPY exchange rate is still on a downward track.
- The bulls will not regain control of the trend, according to the performance over that time period, without moving towards the resistance levels 137.75 and the psychological top 140.00 again.
- On the other hand, returning to the support area 131.70 will be important for the bears to launch down again.
- It is better to think about buying a pair without risk.
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