USD/JPY in a bearish trend as BOJ’s Kuroda speech is pessimistic on the economy. Bank of Japan Governor Haruhiko Kuroda said the central bank would consider additional rapid easing if the coronavirus outbreak significantly threatened Japan’s economy and price trends. He called the coronavirus outbreak the “biggest uncertainty” for the domestic economy and added for additional easing steps without hesitation if the economic risks from the virus heightened.

In the parliament, BOJ Governor Haruhiko said “Japan’s economy likely to remain in a severe state, prices to remain on a weak note due to pandemic impact, falling oil costs,” and also added that the risks to Japan’s economic outlook are skewed to the downside. Interest rates are set below zero in the last 4 years for the QE program.

USD/JPY has been trading within a range of 108.10 to 107.30 since May 19. A breakout in the range was expected as the US stock market rally is not showing any signs of slowing down. As of Friday, the S&P 500 index was up nearly 35% from the low of 2,192 observed in March. The stocks continuously remain in bid despite the escalating US-China tensions and fears of the second wave of coronavirus.

We expect a bearish trend. If the bear trend continues we could see USD/JPY breaking 107.58 (S1) and aim for next 107.45 (S2) and if the bull markets take over then we can expect it to break at 107.80 (R1) and aim for 107.91 (R2).

USD/JPY 4 Hour Chart:

Support: 107.58(S1), 107.45(S2), 107.22(S3).

Resistance:  107.80(R1), 107.91(R2), 108.13(R3).

Considering all the catalysts, we expect a bearish trend for the pair.