USD/JPY: A bigger retracement could be on the horizon – MUFG

Governor Kuroda’s last monetary policy meeting ended without any surprise policy changes. USD/JPY jumped in reaction. However, economists at MUFG Bank expect the pair to turn back lower.

Bank of Japan left its policy settings unchanged

“There had been a small degree of speculation that Kuroda could make further changes to YCC given the continued dysfunctional JGB market conditions so the unchanged policy announcement has fuelled some Yen selling.”

“USD/JPY has bounced on the back of the BoJ policy announcement but the developments in the US seem far more significant and given the US yield move, a bigger retracement in USD/JPY could be on the horizon.”