USD/JPY Surges Above 142.00 After BoJ Policy Tweak

In the European session, the USD/JPY pair shows strength, comfortably surpassing the crucial resistance level of 142.00. This surge comes as investors digest the recent tweak in the interest rate policy by the Bank of Japan (BoJ).

BoJ Governor Kazuo Ueda made an important move by allowing more flexibility in the Yield Curve Control (YCC) while maintaining interest rates in negative territory. This decision reflects the central bank's aim to push inflation steadily above 2%. The increased flexibility in YCC sends a strong message that the BoJ is charting a roadmap for an eventual exit from its ultra-loose monetary policy.

As the impact of the policy tweak by the BoJ gradually fades, risk-perceived assets are discovering renewed strength. This positive sentiment has contributed to the USD/JPY pair sustaining its position comfortably above the crucial resistance level of 142.00.

The USD/JPY's bullish momentum is also supported by the softening of the US core Personal Consumption Expenditures (PCE) price index. This development has strengthened risk-appetite among investors, leading them to seek exposure to assets like the US Dollar and riskier assets like stocks.

As the trading day unfolds, market participants will closely monitor any further developments in the BoJ's policy approach and US economic data releases, which could influence the USD/JPY's trajectory. The BoJ's commitment to achieving its inflation target and the path towards policy normalization will be key factors to watch in the coming sessions.


TurnAround Point: 143.450

Our preference

Short positions above 143.450 with targets at 141.250 & 140.80 in extension.