- USD / JPY saw some selling for the second day in a row on Thursday.
- A softer risk tone benefits the safe-haven JPY and puts some pressure on the pair.
- Bulls largely ignore the BoJ’s pessimistic outlook on GDP growth and inflation.
The pair USD/JPY remains under slight pressure at the start of the European session of the jeuves, remaining near the lower limit of its intraday range around the 113.50 region.
The pair has struggled to capitalize on the previous day’s late bounce from the 113.40-35 zone, or near two-week lows, and have found new sales on thursday. This marks the second consecutive day of negative movement and is due to weaker trade sentiment around Asian stock markets, which tends to benefit the safe-haven Japanese yen.
The pair’s bulls haven’t gotten any respite after the Bank of Japan (BoJ) reduced its real estimates of GDP growth and consumer inflation for the current fiscal year. In the new quarterly report, the BoJ has forecast growth of 3.4% for the year through March 2022, down from its previous estimate of 3.8%, and has also revised down its inflation forecast to 0% from 0.6 % previous.
This has reinforced market expectations that the BoJ will maintain its ultra-flexible monetary policy and it will lag behind other major central banks in reducing pandemic-era stimulus. The Japanese central bank, however, sounded more positive about the long-term outlook and revised up its growth forecast for the fiscal year through March 2023 to 2.9% from the previous estimate of 2.7%.
However, the USD / JPY pair has reacted little to the BoJ announcement and Governor Haruhiko Kuroda’s comments at the post-meeting press conference, showing his willingness to make the policy even more flexible if necessary. That said, a modest rally in US Treasury yields has helped limit any deeper losses amid subdued action around the USD and ahead of key events and data on Thursday.
It is planned that the European Central Bank announce your monetary policy decision during the European session. Apart from this, the advance report of the US Third Quarter GDP It could instill some volatility in the markets and provide a further boost to the USD / JPY pair. Investors could continue to take cues from US bond yields and broader market risk sentiment.
USD / JPY technical levels
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