USD/JPY swirls 60 pip high towards 141.00 on BoJ status quo, Governor Ueda’s speech eyed

• USD/JPY picks up bids to refresh intraday high, reversing early day weakness on BoJ’s verdict.
• BoJ matches market forecasts of keeping benchmark rate, YCC unchanged.
• Traders will seem more details from Governor Ueda, US Michigan Consumer Sentiment Index for clear directions.

USD/JPY takes the bids to refresh intraday high near 140.70 as the Bank of Japan (BoJ) keeps monetary policy unchanged, as expected, during early Friday. Adding strength to the Yen pair’s upside momentum could be the US Dollar’s consolidation of the previous day’s heavy losses and a corrective bounce in the yields.

BoJ keeps the short-term interest rate target at -0.1% while directing 10-year Japanese Government Bond (JGB) yields with the band of +/-0.50%, per the latest monetary policy meeting update. The Japanese central bank also tames inflation fears by saying that the Consumer Price Index (CPI) around 3.5% recently owing to pass-through effects.

Also read: Breaking: BoJ leaves monetary policy settings unadjusted, USD/JPY advances

On the other hand, US Dollar Index (DXY) picks up bids to pare the biggest daily loss in three months around 102.30. That said, the quote dropped heavily the previous day on mixed US data and the market’s lack of conviction about the Fed’s July rate hike, even if the policymakers did utter the same on Wednesday.

That said, the latest US dollar rebound could be linked to the mildly bid Treasury bond yields and cautious mood ahead of the second-tier data, as well as nearly 70% market bets on the July Fed rate hike, per the CME’s FedWatch Tool.

Having witnessed the initial reaction to the BoJ, the Yen pair will pay attention to Governor Kazuo Ueda’s press conference, around 06:00 AM GMT, for fresh impulse. Although BoJ’s Ueda has previously ruled out the need for any change to the current monetary policy, hints of a future exit from the ultra-easy measures may allow the USD/JPY bulls to take a breather.

Following that, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations will be crucial for clear directions, especially amid the recently easing hawkish Fed bets.

Technical analysis

Despite the latest run-up, the USD/JPY remains inside a 3.5-month-old rising wedge bearish chart formation, between 141.60 and 137.70 by the press time. That said, the overbought RSI conditions challenge the Yen pair buyers of late.