USD/JPY jumps 250 pips approaching the 131.00 zone after the BoJ decision

• USD/JPY rises nearly 250 points on Bank of Japan inaction, marking the biggest daily jump in seven months.
• The Bank of Japan keeps the reference rate and monetary policy unchanged.
• Yields rallied on BoJ announcements, while equities, stock futures and DXY fell.
• Governor Kuroda’s speech will offer immediate directions ahead of US retail sales and PPI.

USD/JPY is up close to 250 pips after the Bank of Japan announcement. The pair has jumped from the 128.35/40 zone to fresh six-day highs at 130.96.

USD/JPY posts intraday gains of close to 2.14% around 130.95 after the Bank of Japan surprised markets by taking no action at its latest monetary policy meeting held early on Wednesday. The reason could be related to the high expectations of the market regarding the Japanese monetary policy makers.

That said, the BoJ is announcing no changes to its monetary policy settings in December, keeping rates at -10 basis points and the 10-year Japanese Government Bond (JGB) yield target unchanged at 0.00%.

Aside from no change to the BoJ’s YCC policy and rates intact, the BOJ’s quarterly outlook report also allowed the USD/JPY to prepare for the biggest daily rise since mid- June 2022.

According to the latest BoJ report, “Increased price growth is likely to imply sustainable wage increases.”

With this, US Treasury yields reversed the rebound earlier in the day to fall towards 3.50%, while S&P 500 futures posted intraday gains of 0.30%, following mild negative signals from the US. intraday performance. As a result, the US Dollar Index (DXY) is moving towards 103.00, gaining 0.38% intraday to press time.

Going forward, BoJ Governor Haruhiko Kuroda’s speech will be important for the immediate direction of the USD/JPY pair. However, most attention will be on US Retail Sales and December PPI, which are expected at 0.1% and -0.1% m/m vs. -0.6% and 0.3%, respectively, in amidst the latest BoJ disappointment.

USD/JPY Technical Analysis

For USD/JPY bulls to regain control, trade needs to break above the May 2022 high around 131.35.