USD/JPY looks to recapture 119.40 as yen loses shine after BOJ maintains status-quo

• USD/JPY has surged sharply as the yen weakens on unchanged BOJ’s monetary policy.
• Yearly Japan’s National CPI has landed at 0.9%, well below the upside cap of 2%.
• This week Fed Powell’s speech and Biden-NATO meet will remain in focus.

The USD/JPY has witnessed a bullish open-test drive session on Monday, which usually denotes a carry-forwarded buying from the previous trading session. The pair opened at 119.12, witnessed a minor amount of offers. Later, the major bounced back sharply and breached the opening price decisively, which sent the pair towards 119.30, at the time of writing.

The Bank of Japan (BOJ) kept the interest rate unchanged at -0.1%. The decision from the policymakers was very much in-line with the market consensus. BOJ Governor Haruhiko Kuroda preferred to stick to an unchanged policy led by capped inflation print in Japan. The Statistics Bureau of Japan reported the yearly National Consumer Price Index (CPI) at 0.9% on Friday, much higher than the previous print of 0.5% and market consensus of 0.3 but well below the upside cap of 2%. This has underpinned the greenback against the Japanese yen.

On the dollar front, the US dollar index (DXY) is oscillating in a narrow range of 98.13-98.30 as investors await the first speech from Federal Reserve (Fed)’s Chair Jerome Powell after raising the interest rates for the very first time post the pandemic of Covid-19. The speech from Fed’s Powell will provide guidance for the likely monetary policy action going forward. Apart from that, investors will also focus on US President Joe Biden's meeting with the NATO allies. The central spotlight of the meeting will be the diplomatic solution to bring a ceasefire in the Russia-Ukraine war. Moreover, the Russian economy may face more sanctions post the Biden-NATO meet.