USD/JPY drops and pops on BOJ’s new policy framework

The USD/JPY pair came under massive selling pressure as the yen regained footing after the BOJ kept rates and ETF purchase amount unchanged at its policy review meeting today.

USD/JPY support above 101.00

The USD/JPY pair witnessed wild swings post the BOJ policy announcement, initially plunging to 101.08 levels in a knee-jerk reaction to the BOJ’s rates on-hold decision, although quickly regained poise and jumped back beyond 102 handle after the central bank noted that it will continue to expand monetary base until the inflation exceeds 2% price target and stays above the last in stable manner.

At the time of writing the major rallies almost 1% to 102.62, heading quickly towards 103 handle, as markets assess somewhat dovish BOJ monetary policy.

Focus now turns towards the BOJ Governor Kuroda’s press conference due ahead of Europe open, while markets continue to digest the latest policy decision.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 103 (round figure). A break above the last, the major could test 103.36 (Sept 14 high). While to the downside, the immediate support is seen at 101.00 (round figure) and below that at 100.50 (multi-week lows).