USD/JPY turns negative after BOJ news
- BOJ trimmed long duration bond purchases.
- So, the Yen picked up a bid.
- USD/JPY is down 0.46% from an overnight high of 107.68.
Bank of Japan's (BOJ) decision to reduce the purchases of long duration Japanese government bonds (JGBs), though a routine operation, seems to have strengthened the bid tone around the Japanese Yen.
The USD/JPY, which was already on the back foot, extended the decline to a fresh session low of 107.15 after the BOJ news. As of writing, the spot is trading at 107.20 - down 0.45 percent from the overnight high of 107.68.
The pullback could be associated with a 299 point drop in the US stocks and the retreat in the US 10-year treasury yield from 2.92 percent to 2.82 percent.
The decline could be extended further if the stock markets in Asia and Europe respond negatively to Powell's unambiguously positive comments on the economy. Further, the USD may run into offers if the US fourth-quarter GDP is revised significantly lower than the estimated downward revision to 2.5 percent from the advance estimate of 2.6 percent.
USD/JPY Technical Levels
Jim Langlands from FX Charts details the technical set up as follows-
" US$ Jpy seems to be building a base and managed to spend the entire day above the daily Tenkan (106.70), adding confidence to further upside momentum. I prefer to buy dips to 107.00, looking for a run up to 107.90 and possibly higher. If we can crack 108.00 we may head towards 108.35. Downside stops should be placed under 106.70."