USDJPY on pace to its largest percentage gain since October 2023

The USDJPY continues to run to the upside with the currency pair now up 1.32% on the day. That is the largest increase since the end of October when the pair moved up 1.75%.

It is Golden Week next week and markets are closed on Monday in Japan.

The Bank of Japan kept rates unchanged. It is what was said that has increased the bullish bias for the pair (selling of the JPY).

During a press conference, Bank of Japan Governor Kazuo Ueda outlined the central bank’s current monetary policy stance and considerations for future adjustments. Ueda emphasized that the BOJ plans to maintain easy financial conditions for the time being but indicated that the bank’s future monetary policy will be guided by the evolving economic and price conditions, rather than being dictated by a single indicator. He acknowledged that while the Japanese economy has shown moderate recovery, there are still some weaknesses, and highlighted the need to monitor financial and foreign exchange market movements due to their potential impact on the economy and prices.

Governor Ueda clarified that the BOJ’s policy is not aimed at directly controlling the exchange rate but noted that they will continue to observe the effects of foreign exchange on the economy and inflation. Despite the weak yen not significantly influencing trend inflation so far, it has contributed somewhat to higher inflation forecasts. Ueda stated that the likelihood of reaching the BOJ’s 2% inflation target is gradually increasing and that adjustments to the degree of monetary easing might be necessary if underlying inflation rises. He also mentioned that foreign exchange fluctuations could be a factor in monetary policy decisions if they significantly affect underlying inflation, though the impact of FX on inflation is generally considered temporary.

“Continuing to observe” is not all that scary. Also, the weak yen has not significantly influenced price trend inflation is also not scary.

That opened the door for the run to the upside. The 160.00 level is getting closer and closer. The high swing level from May 1990 hit at 160.40

This article was written by Greg Michalowski at www.forexlive.com.