USD/JPY has posted slight gains in the Monday session. In North American trade, the pair is trading at 105.43, down 0.17% on the day.
More of the same from Kuroda
Whenever BoJ Governor Haruhiko Kuroda speaks, the markets listen. More often than not, however, Kuroda does not have anything dramatic to share. This appeared to be the case yet again on Monday, as Kuroda’s comments that the BoJ would not hesitate to take additional easing steps were dutifully reported, but had little effect on the movement of the Japanese yen. Kuroda said that Covid-19 had significantly weakened consumer demand, and he expected the inflation rate to remain negative until next year. Kuroda sought to reassure investors that the BoJ was flexible and had not run out of policy tools to combat the economic fallout from Covid-19. However, a strong case can be made that the central bank lacks flexibility. For example, the bank has stubbornly stuck to an inflation target of around 2 percent, even though this target seems hopelessly unrealistic. Kuroda’s comments stuck to a well-worn script, save for the comment that the central bank would further explore introducing a digital currency next year.
Investors continue to show an appetite for risk, and this stance has come at the expense of both the US dollar and the Japanese yen, which are safe-haven assets. The exchange rate for USD/JPY is very close to what it was at the start of August, as the yen has been unable to take advantage of the sagging US dollar. With the Japanese economy limping along, there isn’t much to attract investors to the Japanese currency, unless risk sentiment decreases significantly.
USD/JPY Technical Analysis
- 105.46 is the next support line. Close by, there is support at 105.29
- There is resistance at 105.92. The next resistance line is at 106.21
- USD/JPY is putting downward pressure on the 20-day MA. If the pair breaks below this line, it would be a bearish signal for the pair