USD/JPY daily chart
This is a firm breakout above the 135.00 mark and was triggered in the run up to BOJ governor Ueda’s press conference earlier. Ueda himself failed to offer much clear communication (you can check out my recap here) and so markets are running with the decision that the BOJ is not going to make any big changes any time soon.
The jump above 135.00 also looks to be triggering some stops as we see the pair now hit a high of 136.18 in European trading.
From a technical perspective, it was already highlighted earlier that the pair now has scope to roam towards the 200-day moving average (blue line) at 136.96 and that is very much in play right now.
The March high of 137.90 will come next before buyers may set their sights towards the 140.00 mark.
The only gripe I have with any major extension in the pair is that it might need some help from the bond market. Today is an exception due to it being a BOJ-related move. So, the break in correlation between the yen and bond yields is quite notable.
However, given time, USD/JPY and 10-year Treasury yields tend to move in synchronicity and if yields are to hold lower, it may only be a matter of time before the currency pair turns back the other way around.
I mean, as mentioned in the linked post above, today does not mark a shift in BOJ thinking. It was just mostly some market players feeling disappointed that there was no surprise followed up by poor communication from Ueda.
