US dollar lost its gain against yen today. The main reason could be linked to the mixed performance of US Treasury yields and the S&P 500 Futures amid a light calendar and pre-BOJ caution.

Meanwhile The Bank of Japan (BOJ) has kept its monetary policy settings unchanged following the conclusion of its two-day monetary policy review meeting on Friday. Elsewhere, the central bank kept the benchmark policy rate on hold at -10bps while maintaining its pledge to buy J-REITS at an annual pace of up to JPY180 bln.

The BOJ as widely expected has extended a deadline for its pandemic-relief programme beyond September by six months, in a continued effort to stimulate the fragile economy and less enthusatic inflation.

On the other hand, Japan will tighten its rules on support for the exports of new coal power plants, in line with a pact by the Group of Seven nations (G7) to halt new government backing for unabated coal power by the end of 2021, a government official said on Friday.

The G7 pledged on Sunday to rapidly scale up technologies and policies that speed the transition away from such power, generated by plants that lack emissions-cutting measures, such as carbon capture and storage (CCS).

Japan has tightened state-backed financing criteria for overseas coal-fired power plants last July, after drawing criticism for its support of the dirty fossil fuel. However it exempted certain situations, such as when a country seeking energy stability lacks any alternative to coal and seeks to build a coal-fired station employing Japan’s so-called clean coal technology.

The market struggles for a clear direction and the US Treasury yields are indecisive after Thursday’s slump. Hence, today’s BOJ meeting is not to offer any key moves to the USD/JPY prices till it offers a major relief to citizens over the covid-led emergency that ended in most prefectures except for Tokyo yesterday. It should, however, be noted that the Japanese central bank may highlight the weaker inflation expectations at home and abroad to keep the easy money flowing, which in turn may prove the USD/JPY sellers.

USD/JPY 4 Hour Chart:

Support: 109.98 (S1), 109.74 (S2), 109.33 (S3).

Resistance: 110.64 (R1), 111.06 (R2), 111.30 (R3).

Amidst the BOJ interest rate decision pushes the yen into gaining moment. We expect a bearish trend for USD/JPY pair.