Today, USD/JPY is stepping into bullish moment and the yen seems to struggle as a response to the monetary policy meeting. The Bank of Japan (BOJ) left its monetary policy settings untouched following the conclusion of its two-day April monetary policy review meeting on Tuesday.
Japanese shares looked to suffer on Tuesday as investors looked past upbeat corporate outlook amid worries about the government’s handling of the COVID-19 pandemic, while chip-related stocks took cues from a positive finish overnight on the Nasdaq. “There are uncertainties on the effect of the state of emergency that is imposed on certain parts of Japan, as many people seem to be ignoring it,” said an strategist.
Japan has imposed a third state of emergency on Tokyo and other big cities, against that the local media have reported many parts of Tokyo are still crowded as people aren’t complying with the order.
On the other hand, recent fears that the US Republicans may regain control in the Senate, which in turn raise challenges for further stimulus, was the major downer for Wall Street. However, unlock plans from the UK and the US as well as hopes that faster vaccinations will trigger a sooner economic recovery builds traders confidence.
Looking ahead, the BOJ’s tone in a statement and the economic outlook for the first quarter (Q1) will be closely watched after the nation recalled emergency in Tokyo and three other prefectures due to the covid resurgence. It should be noted that the BOJ is up for keeping its short-term rates with a target of -0.1% while also targeting 0.0% figures for the 10-year bond yield. Still, the BOJ will likely hold the view that the economy will recover at a modest pace, followed by a gradual pickup in inflation.
USD/JPY 4 Hour Chart:
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