Usdjpy At Multimonths Low After Kuroda Speech

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Usdjpy At Multimonths Low After Kuroda Speech

USD/JPY At Multi-Months Low After Kuroda Speech

During Tuesday's trading session, USD/JPY was down by 400 pips and was last seen trading at 133.00. This was followed by the policy update from the Bank of Japan.

Kurdo (Governor of BOJ) recently made it clear that the central bank will not hesitate to further ease its policy. However, the pair had virtually no reaction to these comments and continues to linger at a multi-month low.

A closer at the Japanese Yen reveals that weaker domestic data is weighing it down. In addition, the current account deficit and the economic contraction are also putting pressure on the Japanese currency.

If we look at the USD, the US bond yields have increased the rate difference between the US and Japan. So that's another reason why more funds are moving away from the Japanese Yen.

This whole scenario tells us that we may witness some buying in USD/JPY around the 136.25 price level.

USD/JPY Upside Is Capped

According to experts, the bullish pressure in USD/JPY is not strong enough and will run out of steam once the pair approaches 137.25. The key reason behind this is the weak demand for the US Dollar - Investors around the world are fearful that Fed will back away from its policy of rate hikes.

Looking ahead, we do have some macro data releases from the USA, which could tell us what's expected from the Fed. However, there are some rumors that Fed will lean towards rising rates once again at a fast pace.

Overall, the sentiment around the USD/JPY is very mixed, which is preventing traders from aggressively buying the pair. So, for now, there's a higher chance that the USD/JPY will remain in range-bound price action.

In addition we may not see any big moves in USD/JPY as investors go on holiday. But once we are in the mid of January, the action will return to the USD/JPY as 2023 is expected to be a wild year.

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