USD/JPY bears eye 129.00 on BoJ Minutes, focus on US GDP, Tokyo inflation

• USD/JPY takes offers to refresh intraday low after BoJ Minutes.
• BoJ Minutes flashed mixed signals as majority supported easy-money policy, one member criticized YCC tweak.
• Mixed sentiment, broad US Dollar weakness exerts downside pressure amid sluggish start to the week.
• Pre-FOMC blackout, China holidays may restrict markets moves but PMIs, inflation and US GDP could entertain traders.

USD/JPY renews its intraday low around 129.20, reversing the previous day’s recovery, as Bank of Japan (BoJ) monetary policy meeting minutes failed to push back hawkish bias for the Japanese central bank during early Monday. Also likely to have favored the Yen pair sellers could be the broad US Dollar weakness amid fears of softer rate hikes and a soft landing of the world’s largest economy.

That said, the latest BoJ Minutes stated that one member said inappropriate to tweak policy target. On the same line, the Minute statement also stated, “Several members said effect of powerful monetary easing will continue even if BoJ widens band around its yield target.”

Also read: BoJ minutes: One member said inappropriate to tweak policy target

During the weekend, Japanese Prime Minister (PM) Fumio Kishida said, per Bloomberg, that it isn’t the time now to discuss revising an accord the government set with the Bank of Japan in 2013 that aimed to help achieve its 2% inflation target. 

Elsewhere, the Fed officials were hawkish ahead of the two-week-long pre-FOMC (Federal Open Market Committee) blackout period. Federal Reserve Governor Christopher Waller was the last from the US central bank speakers to cross the wires as he said, “He favors a 25 basis point rate hike at the upcoming meeting and continued policy tightening beyond that.”

It should be noted that the firmer inflation numbers from Japan and the BoJ’s tweaking of the Yield Curve Control (YCC) policy in the previous month appeared to have triggered hawkish bias for the Japanese central bank. On the other hand, the Fed is trying to convince the markets that it still has some ammunition left and can propel the rates even if the latest US data has been favoring policy pivot talks.

Amid these plays, the yields struggle to overcome the multi-day top while the US stock futures are mildly offered by the press time.

Moving on, Tokyo Consumer Price Index (CPI) and the fourth quarter (Q4) US Gross Domestic Product (GDP) will be crucial for the USD/JPY pair traders to watch for fresh clues.

Above all, a divergence in the market’s hopes of BoJ’s hawkish move and the Fed’s pause in the rate hikes seem to keep the USD/JPY bears hopeful.

Technical analysis

A daily closing beyond the three-month-old descending resistance line, around 129.65 by the press time, appears necessary for the USD/JPY bulls to retake control. Even so, the 130.00 round figure could act as an extra filter towards the north. Alternatively, the monthly low of 127.20 appears to lure the bears of late.