Yen Rally Continues, BoJ Stays The Course

The Japanese yen continues to flex its muscles, as USD/JPY has dropped for a fifth successive day. At the time of writing on Friday, the pair is trading at 104.43, down 0.29% on the day. USD/JPY is down 1.65% this week and touched a 7-week low earlier in the day.

It has been an eventful week in Japan. Yoshihide Suga became the new prime minister, replacing Shinzo Abe, who resigned due to poor health. This marked the first leadership change in Japan in eight years, but the transition was a smooth one and the Japanese yen didn’t miss a beat, as it continued to head higher.

BoJ will maintain easing

The Bank of Japan held its policy meeting on Thursday, and the message was more of the same from the bank. BoJ Governor Haruhiko Kuroda pledged to maintain the central bank’s monetary stimulus, in order to support the economy, which is in a recession in the wake of the devastating toll of Covid-19. Still, the BoJ sounded somewhat optimistic, saying that “economic activity has resumed gradually and is picking up its pace of growth”.

The BoJ has clearly changed its tune; back in July, it warned that economic conditions were “severe”. Policymakers maintained interest rates at -0.10% and also kept emergency funding programs for businesses in place. Investors appeared to share the bank’s optimism that the economy is headed in the right direction, as the yen posted slight gains on Thursday.

USD/JPY Technical Analysis

USD/JPY Daily Chart

USD/JPY Daily Chart

  • USD/JPY broke below support at 104.45 in the Asian session. This is followed by support at 104.16
  • There is resistance at 105.10. The next resistance line is at 105.46

Original Post

Yen Rally Continues, BoJ Stays The Course

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.