Following Kuroda, the USD/JPY is trading at a multi-month low of 133.00
USD/JPY is down more than 400 pips on Tuesday near 132.50 following the Bank of Japan’s policy tweak. In the press conference, BOJ Governor Kuroda reiterated that they won’t hesitate to ease policy further if necessary but failed to trigger a reaction in the pair.
The Japanese Yen is weighed down by the weaker domestic data, showing an unexpected current account deficit and an economic contraction during the third quarter. Apart from this, a goodish rebound in the US Treasury bond yields widens the US-Japan rate differential and further contributes to driving flows away from the JPY. This, in turn, assists the USD/JPY pair to attract some buying near the 136.25 region.
The intraday uptick, however, lacks bullish conviction and runs out of steam near the 137.25 zone amid subdued US Dollar demand. Expectations that the Fed will slow the pace of its policy tightening cycle keeps the USD bulls on the defensive and caps the upside for the USD/JPY pair. That said, the incoming positive US macro data has been fuelling speculations that the Fed might lift rates more than recently projected.