The leak overnight definitely raises the proposition of a buy the rumour, sell the fact play. But we’ll still have to let the dust settle first to be sure of anything like that. The whipsaw on the decision saw the pair fall to a low of 151.59 with the jump back hitting a high of 153.88. But now, the pair is settling around 153.00-20 levels for the most part in the last few minutes.
Overall, the decision is what you would expect from the BOJ especially after the leak yesterday. The tapering of bond purchases is gradual at inception but could pick up depending on their midterm reviews. As for the rate decision, it would’ve been a surprise two weeks ago but this report last week helped markets to cope and the overnight leak here made things much easier to digest.
Going back to USD/JPY on the charts, the bounce off the low earlier comes as the pair tests its 200-day moving average of 151.63 on the day. That gave dip buyers a level to lean on in pushing price back up for now. But the jump is stalling around the 100-hour moving average (red line) at 153.68 currently.
And there’s still much work to do to convince of an upside bounce, with the 155.00 mark still offering some resistance and now the 200-hour moving average (blue line) as well at 154.93.
As a side note, just be wary that there are large option expiries for the pair again at the 155.00 level today. That played a role in drawing but also limiting price action yesterday.
This article was written by Justin Low at www.forexlive.com.
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