Poker Faced BOJ Sends JPY Sinking Lower

JPY Under PressureThe Japanese Yen has weakened sharply across early European trading on Tuesday following the Bank of Japan’s December monetary policy meeting overnight. Despite the usual speculation that the BOJ is headed towards policy normalisation and expectations of a potential ‘signal’, the BOJ once again held policy unchanged and reaffirmed its commitment to easing.  BOJ Holds SteadyBOJ governor Ueda held rates steady at -0.1% along with keeping the bank’s yield curve control program unchanged after last revising it in October. Additionally, Ueda warned that the bank stood ready to take further easing action if necessary, in order to keep the economy and financial system supported. Over recent months, bigger market players have become more expectant of a shift in BOJ policy across 2024 with some banks even calling for rate hikes as early as January. However, this latest meeting has done little to encourage this view and might even cause some to reverse their outlooks now.Downside JPY RisksOn the back of the meeting, JPY looks likely to stay pressured near-term particularly while risks assets are rising in a weak-USD environment. With little indication that the BOJ is likely to shift course imminently traders will now await a fresh signal from the bank with March pegged as the next best option for a potential change in course.Technical ViewsUSDJPYThe sell off in USDJPY stalled into a subsequent test of the 142.03 area with price now reversing sharply higher. 145 will now be the big challenge for bulls with a move back above there opening the way for a move up to the 148.98 area next in line with rising momentum studies readings.